Eaton Corp. (ETN)

All 3 of the Top Picks today involve taking a bit of money away from the infrastructure plays.

Power management, but especially on the electrical side -- "intelligent" power management. Huge backlog. Uses AI for product design and to handle repetitious tasks. Not as much runway with this one. Buy 1/3 here, another 1/3 around $330, and another around $300. Yield is 1.16%.

Their success lies in their electrical division in relation to data centre building. He owned this and sold when it was at 33x PE. The whole sector has come off with some doubt in data centre spending. Is sort of attractive now at high-20s PE. You could step in now for a long-term hold, but this could further.

He particularly likes the infrastructure space. The electrical division of this name is on fire with its involvement in data centres.

Is -10% the last month as the AI trade loses steam. Has been watching this a long time. Is a power play in data centres, driven by strong capex. AI workflows will drive a 160% increase in power needs by 2030.

A classic case of rising shares into earnings, they report, then shares fall. But ETN participates in the data centre build out with data centre orders up 55% and revenues up 50%. Was upgraded today.

Likes industrials as a whole, especially the global ones. Sells a lot of gear into power generation and power control, which will be a really important place to be. Tested long-term MA during the April correction, but now back above all key MAs. Last 3 earnings revisions have all been higher. Two of three revisions for next year are higher. Sets up well technically. Only fly in ointment is that it hasn't made a new high yet. Decent hold.

He owns GEV instead.

Exciting. Electrical segment key to data centres. Concerns that whole industry may have jumped the gun, and that technology will be obsolete by the time centres are up and running. He's encouraged by its low valuation.

He did well owning this, but sold around 33x PE, too rich. It went higher on momentum, but has sold hard lately. He's looking at it now. A very good company in data centre expansion. Lots of growth, but would buy at a lower PE.

She trimmed GE Vernoa to buy more Eaton and Quanta Services, and both just reported blow-out quarters. Quanta: EBITDA +40%, backlog +14%. Eaton: data centres +45%, pipeline +65%, and backlog 3x more than normal. Good valuations.

Can benefit from electrification and selling transmitters and generators. Pulled back, but still not cheap; if that continues, might be worth dipping your toe in.

Sometimes a report doesn't meet expectations, despite being a good quarter. This happened to Eaton.

He added shares during Monday's sharp sell-off. They report Friday. It's a fine, long-term story

Electrical components are driving the business. Has done very well. The hype is from the electrical side and AI/data centres. Sold it. Feels it is stretched on the valuation side. Trading at 33x earnings. Expectations for next year and the following year are in the 10% range. Not enough growth versus current price. 

Sells things needed to build power capacity. Future is very good, especially with infrastructure spends around the power grid. Continues to grow double digits.