We recently published a list of Jim Cramer’s Top Picks: 10 Stocks to Buy and Sell. Since Vertiv Holdings Co (NYSE:VRT) ranks 3rd on the list, it deserves a deeper look.
Commenting on the aggressive rate cut by the Federal Reserve, Jim Cramer said in a latest program on CNBC that the “double” rate cut was needed for the economy and it would help the housing market, industrials and companies catering to the “less well-off” households.
“There really are two economies in this country. There is the one that needs lower interest rates because business is slowing and it’s harder to find a job and then there is one that says we don’t really care about where the stinking rates are. That’s who we can get a double rate cut today and still going lower.”
Cramer said he is currently in Silicon Valley and after talking to many companies, he feels tech companies do not care about interest rates since they are selling to businesses. Cramer said these technology companies are focused on innovation.
For this article, we picked 10 stocks Jim Cramer recently talked about during his latest programs on CNBC. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Investors: 92
When asked about Vertiv Holdings Co (NYSE:VRT), Cramer said that Vertiv stock has “come down enough.”
“I’ve had it with the sellers. They’ve got to recognize that the time to sell Vertiv has come and gone.”
Vertiv Holdings Co (NYSE:VRT) is a market leader in the data center power and cooling market, which has nowhere to go but up from here since companies are hungry for data center solutions as they begin to deploy AI software.
Vertiv Holdings Co (NYSE:VRT) is forming long-term partnerships with Intel and Nvidia to develop tailored solutions for their products. This is especially notable because AI training requires significantly more electricity and produces more heat than traditional servers, driving demand for specialized systems that Vertiv Holdings Co (NYSE:VRT) provides. The company estimates that the additional demand from AI could boost its top-line growth by up to 4% annually.
By designing products specifically for Nvidia’s GPUs, Vertiv can tap into Nvidia’s growth with minimal effort, as their systems are crucial for optimizing GPU performance. If Nvidia powers data centers with its processors, Vertiv provides the infrastructure that keeps them running efficiently.
Vertiv Holdings Co (NYSE:VRT) revenue has grown on average at 10% in the most recent quarters. The company has a backlog of over $7 billion, more than a year’s worth of current revenue. Vertiv is targeting a 20% operating margin by 2028.
Baron Small Cap Fund stated the following regarding Vertiv Holdings Co (NYSE:VRT) in its Q2 2024 investor letter:
“Vertiv Holdings Co (NYSE:VRT) a leading provider of critical digital infrastructure for data centers, contributed during the quarter. As an industry leader in data center cooling and power management, Vertiv is poised to benefit from AI-driven growth in data center spend. The NVIDIA partner network, strong industry relationships, and broad product portfolio that Vertiv maintains enables its participation in the creation of the technology roadmap for the future of the data center. In addition, Vertiv is investing in its capacity to serve this growing end market more effectively. The company also has an extensive global service network to aid customers as they grow. We believe the company has durable competitive advantages and a flexible balance sheet to benefit from the expected significant capital investment in data centers for years to come. Vertiv reported very strong results for the March quarter, with orders up 60%, which highlighted the strong demand it is seeing for its products. We sold some of our position into strength after the runup from the positive report, but still hold a major position in the Fund as we see considerable upside in the shares over time.”
Overall, Vertiv Holdings Co (NYSE:VRT) ranks 3rd on Insider Monkey’s list titled Jim Cramer’s Top Picks: 10 Stocks to Buy and Sell. While we acknowledge the potential of Vertiv Holdings Co (NYSE:VRT), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VRT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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