Modine Manufacturing Company (NYSE:MOD) is a data center cooling stock in billionaire Mario Gabelli’s portfolio. Modine is one of the 10 best stocks to buy according to billionaire Mario Gabelli’s fund. Mario Gabelli’s GAMCO Investors held 489,969 shares at the end of the second quarter of 2026, worth $131 million and 1.17% of its portfolio. However, it should be noted that Gabelli has been trimming the position. The fund cut its stake by 11.1% in the second quarter, after a bigger cut of 33.63% in the first quarter. Insider Monkey once ranked Modine second on a list of Gabelli’s small-cap picks with the most upside. Read that list here.
What Modine Does
Modine makes thermal management products. Its Climate Solutions segment sells cooling systems for data centers and heating and cooling products for buildings. Its Performance Technologies segment makes heat exchangers for vehicles and industrial equipment. Data centers make up about 35% of sales, according to a company presentation.
Why the Stock Is Down
Fears about AI credit pulled down many AI infrastructure names, and Modine fell with them. Modine also ran into shortages of key components that cut its production volume in the latest quarter.
Demand has stayed strong. Carillon Eagle Small Cap Growth Fund took note of the fact that Modine’s revenue rose 47% in the fourth quarter of fiscal 2026, led by Climate Solutions. See the fund’s full take here. Revenue rose 28% year over year in the first quarter of fiscal 2027, and adjusted earnings per share beat analyst estimates by 20%. Management kept its fiscal 2027 revenue growth guidance at 20% to 35%.
Bull Case
Modine can grow with every new AI data center because it sells the full cooling system. That covers chillers, air handlers, liquid cooling and controls. AI chips run very hot, so data center operators need more cooling with each new build, and a supplier that offers the whole package can win a bigger piece of each project. Osterweis Opportunity Fund named Modine its biggest contributor among its industrials picks in the first quarter, citing fast growth in HVAC equipment for AI data centers. Read what else the fund said. insidermonkey
Demand looks solid for years. Modine signed a long-term capacity agreement through 2029 with a major data center customer, and its backlog nearly doubled over the past year. The company’s data center business grew at a 93% compound annual rate from fiscal 2023 to fiscal 2025. Artisan Small Cap Fund also called Modine a notable contributor in the first quarter, after the company’s growth outlook improved. Read Artisan’s view here.
Valuation
Modine is not cheap on earnings. Its forward P/E is 29.13, against a sector median of 18.68. Growth explains the premium. Analysts expect earnings per share to grow 56.13% in fiscal 2028, compared with 16.35% for the S&P 500. Pair the P/E with that growth and the forward PEG ratio is 1.17, below the sector median of 1.43. Analyst consensus rates the stock a Strong Buy.
Bear Case
Modine also depends on AI spending. If big data center customers slow their building plans, orders would slow too, and the long-term agreement sits with a single customer. Execution adds more risk. The company is ramping production, replacing a key data center leader and splitting off a business at the same time. Gabelli’s steady selling in the stock gives cautious investors one more reason to wait.
Modine Manufacturing Company gives investors direct exposure to data center cooling, and the stock is cheaper than it was a few months ago. The next few quarters will show whether production catches up with demand.
While we acknowledge the risk and potential of MOD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MOD and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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