Forgent Power Solutions, Inc. (NYSE:FPS) is featured in Mad Money’s latest recap as Jim Cramer shared his buy, sell, or hold verdict. A caller asked if Cramer is still “high” on the stock, and he replied:
Oh yes, very, very much so. We just went over it. I think that, look, electrical distribution equipment is so, I don’t want to call it hot, that would be wrong because it’s just so good, not hot because hot means that it’s expensive. I think Forgent’s a terrific company. I like it very much.
Stock market data. Photo by Photo by Alesia Kozik
Forgent Power Solutions, Inc. (NYSE:FPS) designs and manufactures electrical distribution equipment, such as switchgear, transformers, and power units. In addition, the company provides maintenance, repair, and commissioning services to companies in the technology, utility, and industrial sectors. Cramer discussed the company in detail during the March 4 episode, as he stated:
The truth is, I’ve been watching this Forgent like a hawk. It’s the biggest IPO of the year so far… There’s a reason this stock’s been doing so well since it came public. It’s a terrific play on the hottest theme in the market, the great AI data center buildout. Now, the story’s a good one, and the numbers are pretty darn good, too… Forgent has a leverage ratio of 1.4, which is really nothing to worry about. Now, the one private equity worry that does apply here is the fact that Neos, the sponsor, has a concentrated ownership stake in Forgent and will continue to control the company. Specifically, they still own roughly 79% of the business, and someday, they’re going to want to ring the register. When Neos starts selling down its stake… I think it’s going to put some real pressure on the stock. It really will…
Luckily, we’ve got a good comparison here, which is the aforementioned Vertiv, another electrical equipment maker with big data center exposure. If we adjust Forgent’s calendar using the next four quarters of estimates, we find that Forgent has an enterprise multiple of 27. That’s pretty darn high compared to most industrial companies, but not compared to Vertiv, which has an enterprise multiple of 29.5 based on its 2026 estimates… I think Vertiv really does deserve a premium multiple. So yeah, it’s expensive but it’s still cheaper than the closest competitor. I like that.
Here’s the bottom line: I like Forgent Power Solutions. In fact, I borderline love it. Stock had a great start. While it seems pricey, I think the valuation is justifiable when you look at Vertiv. In my view, Forgent is worth buying right here, right now. The company reports in two weeks. If you want to wait, maybe you want to wait and see what happens there. But maybe there’ll be some reason for Forgent to pull back, giving you a better buying opportunity. Then again, maybe they’ll tell such a good story that you’d want to buy more… I like the look of this one. Put half of it on now and half of it on after it reports.
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