Hammond Power Solutions Inc. (HPS.A.TO)

They benefit from the AI build. HPS makes a transistor used to power semiconductors, which makes it part of this massive infrastructure build.  

Chart looks excellent, momentum is up and to the right. New highs today. Lots of volatility, especially around quarterly earnings. Recent earnings beat on EPS and revenue. Backlog grew 122% YOY.

Ideally suited for expansion of the electrical grid in NA. They make transformers; no matter how the electricity is generated, it has to be transmitted. 

Hard to time an entry price, around current levels not too bad (as long as you're willing to give it a few years). Stock's short-term price swings reflect timing of the buildout and deliveries. Its future deliveries look very good.

Is strongly leveraged to the US data centre build. They supply energy transformers, crucial for those centres.

AI itself is kind of overdone, but there are lots of backdoor ways to play the theme. Great breakout from a base. Angle of ascent on recent move tells that it's overbought. Could theoretically pull back to neckline breakout (somewhere in the $130-140 range), and that's a great place to buy. As long as that holds, it's safe.

If you already own it, he'd keep holding even though there's some potential downside.

Transformers for power generation and storage. Did phenomenally well as the whole electrification of the economy got underway, and that trend isn't going away. Fundamentals have now caught up to the stock, and it looks about to accelerate. New plant is finished. Tailwinds should last for some time.

Reports later this week.

Scores 9 for fundamentals, and 4 for value. The street targets 24% upside. Q2 reported record revenue though gross profit margins dipped due to input costs. Could be vulnerable to rising raw materials costs and supply chain disruptions. They still lead in their industry with a dominant footprint. Data centre demand could be a driver.

Growing demand for energy to build AI will definitely benefit Hammond who make transformers. He said some shares at $150, but is now at a level he would buy for the long term.

(Analysts’ price target is $150.00)

It manufactures dry transformers to provide power. They have a strong backlog and demand. The weakness in the stock reflects the cost over-runs on the new facility in Mexico which has been a drag on earnings. Tends to have choppy quarters.

Sells for 10x PE, whereas all the big European and US electrical companies sell at 30x. Leading market player in dry transformers. Business will boom with AI. Yield is 0.86%.

The results were a bit weak on the growth margin side and the backlog decreased a bit. There is huge demand for new data centres and this is good for Hammond Power. He started accumulating it this year. There is a new plant opening up which will be very efficient for electrification demands.