Plumb: U.S. "Tipping Point" in Manufacturing, AMD Bull Case into Earnings

back to Opening Bell. We're getting ready for the trading day. Stocks are risk on today. So we're seeing U.S. stock index futures higher after a couple of weeks of selling. Tom Plumb, portfolio manager the Plumb Funds, is with us and wanted to get your big picture on the start of this week. A very busy week when it comes to earnings. More than 150 S&P 500 companies due to report, coupled with the fed and other pieces of macroeconomic data. How are you feeling this morning? I'm feeling very good, Nicole. Thank you. Great show. Great start of the week. You do a wonderful job introducing things there. All the investment community. So let's tell the folks how you're feeling about investing at this point. Positive. Definitely. And you know, you just get a hint of what happens when we start to see a little bit of a sign that maybe some of the hostilities in the Middle East will, will abate a little bit. But, you know, as you're as Jenny was pointing out, we are in a massive time of need for capital. You know, the, the old idea of a balanced fund, which we've had for years is not dead, but it's been abused and misused by a lot of people. You know, you have to look at your fixed income as a tool to moderate volatility, because as we were pointing out, or as Jenny pointed out, your previous guest pointed out, we are in an incredible reindustrialization time where there's a big need for capital. And that's going to continue to put pressure on interest rates. So you can use a balanced approach to offset the volatility. But if you start to buy long term fixed income instruments, you're not going to be able to protect your principal or that volatility because we're not going to be in a period of time where interest rates are going to drop to that 2% anytime soon. So at this point, you're really looking towards AI and growth, and it's undeniable that that's where there's volatility, but also that's where the growth is going to come eventually. I know you brought us some stock picks today, which I'll get to in a moment. But I think about the big picture. How far along are we in the AI tech trade and the AI arms race. And do we believe in it because there was concerns last week about free cash flow. Oh, and that's going to be an issue because we're going to have to raise money. Because just talking about that Ohio project, $500 billion just to build an incredible data center, there is going to be need for capital. It's going to come from the fixed income markets, and it's going to come from the equity markets. But we believe that the AI story is a part of a big reindustrialization story for North America. It's going to be something that most people, in fact, probably every one of your viewers who are too young to have witnessed in the past, you're talking about the 1940s to the 1950s, where we built the infrastructure and continue to manufacture in the United States. We're moving from a service economy. This has been the tipping point to an economy that's going to have more balance require industrialization, manufacturing, and all of those things that we have created in the last 30, 40 years where we've reduced our energy consumption per dollar of GDP. Those are starting to ramp up again. The United States is one of those countries that consumes very little energy for every dollar of GDP. It's got to expand, and we're seeing it expand. It means infrastructure all through the whole nation. AI is one component of it, a significant component, but it's not the only component. We are going to be manufacturing things that are necessary to build our economy in the future. When you look at this week's lineup for the economy, you know, we got durable goods came in, not so great, but we also got it will get more. We'll hear from the FOMC. But PCE, GDP new home sales, consumer sentiment with these pieces of economic news, what are you watching for most closely. Well as you said this is a huge week for earnings. And you know one of them of course is AMD Advanced Micro Devices, which has had a great run. But we're expecting that they're going to have almost 100% increase in their earnings, maybe 75 to 80%, I should say. And that's what they give us is their outlook, their demand, the specialty. We're going to be seeing a lot of reports in the next week that are going to tell us what their backlogs are, what their expectations. And it looks like it's not something where we're talking about visibility for the next three months, six months, but some of these companies are going to have discussions about the backlog, the ability business that they see on their books for the next 2 or 3 years. There was a lot of excitement around its AI conference last week and all the announcements that AMD made. So not surprised to hear that you're positive on AMD and what we might hear from them. Let's talk about Modine Manufacturing, a name that you do like designs, engineers tests manufacturers here in the United States all over, actually for critical thermal solutions. You like this name? The stock's been looking pretty decent. Some of your thoughts on MOD. Well, Modine is a company that was in a transition. It had some legacy businesses. We used to talk about them being an industrial radiator company, but they have focused now on their Hvac. They've disposed of a different segments. And so in the past, in the last few years, it was kind of hidden. What was underlying the growth potential because they were divesting certain things and they're adding certain things now. They're so focused on the Hvac for the industrial world and for the data centers. They have a backlog that looks like it's going to be 3 or 4 years out. We're thinking that they're going to be growing their earnings at almost 50% for the next three years. And it's a company that is essential for providing low cost, efficient energy and cooling to the data center business, but also for other manufacturing applications. So we just think that this company is on the brink of a true breakout and going to, you know, basically it's growing at a 50%, trading at about 24 times earnings. We think there's still upside to their. And then when it comes to quanta, let's be a little quickly on this one. Quanta services and gas and utility power. Power is important. I mean powers fuels everything. Obviously you can't have a data center. You can't have a manufacturing. Quanta is the largest supplier of the labor that's necessary for putting the electric cables in underlying the oil pipelines. They're the largest by far in America. And this is something you see a new approval, a new expansion of applications to get electricity, to get oil, to get gas to where it needs to be. This is the company. It's probably on a breakout for multiple years. The infrastructure building in America is probably a decade long, not just a week or a quarter. Still a believer here in the reindustrialisation that requires investment. You said when it comes to stocks, look for stocks for growth, fixed income, to modify the volatility that we're seeing in this market.