Stephanie Link, Chief investment strategist, Hightower GE Vernova GEV-N BUY Oct 04, 2024

Don't rush out and buy. Typically, spinoffs don't have the easiest time out of the gate, jury's out on Vernova. Just hold the original GE for now.

Is up 96% since GE spun it out. A winner, though not cheap. It's part of a secular theme of an energy transformation from now to 2050, fuelled by AI.

It sells on good news, and they're about to report. It attracts data centres, because they will generate nuclear power in 2030.

Wind and solar power aren't enough to power the energy-hungry data centres that gen AI needs. Rather, natural gas is the baseload--nat gas will power gen AI. GEV has huge cash flow. They just announced a $6 billion buyback and a 25-cent dividend. GEV is the best of the GE spin-offs of years ago.

Has nuclear exposure, but little. It's expensive, but GEV has natural gas turbines connected to data centres, so it's solid.

No. Stock's moving up on the electrical plays that are being talked about across the world. One of the major suppliers of equipment all along the chain. Massive demand. Likes this play, would continue to hold. If you want to take a bit of profit, that's OK.

It reports Wednesday. Data centres are red hot and need energy and power plants, which they will need from GEV. GEV had a good 2024 and should have a good 2025.

 Is up 200% since spinning off from GE last April. Nuclear power is a small part of their business and it will take years to pay off. But they have a strong backlog of orders a record $13.2 billion worth; revenues are up a solid 5% YOY, but EPS fell far short. Free cash flow as a little light. Their business is 50/50 equipment and services; they sell equipment which they then service for years, which is a great setup. The equipment backlog is up 50% in the past two years, largely from price increases and customs have no choice but to pay off. So headline numbers in their recent earnings were disappointing, but their backlog numbers are phenomenal. If they can maintain their pricing power, then shares will continue to rise.

She's up 160%, so she trimmed it. It's fairly rich. Are better opportunities in data centres like Eaton. Would buy back GEV at better levels.