Biggest Investment Opportunity of a Lifetime?!

[01:00:00:00 - 01:00:06:21] So a Patreon member had sent me a   list of stocks last week and two of them are  up over 2000% in just the past five years   [01:00:06:21 - 01:04:05:00] They're all companies that support   data center and AI buildouts and they prove  that this AI buildout has already paid off at   least once at scale. And really the question  now is who carries it into the next chapter?   So what I did is I took his list and then I found  several more. So I'm going to be covering 10 names   in this video where most of them are going to be  completely new to you. And keep in mind that it's   important to get familiar with these names but  wait for the right moment to buy after you've   done your research. So if you're new here then  you probably don't know me or the fact that I   retired at 46 all thanks to my investments.  And this is after a career with companies   like Target and Amazon where I happen to have  made them billions upon billions of dollars.   So before we dive in I do want to point out that  I'm not a financial advisor and this is only for   educational purposes. Now when the biggest names  in tech are throwing money at AI there are four   layers of infrastructure before any of it  ever reaches a single server rack. So we're   thinking about the contractors who physically  build out the data centers or the equipment   that goes inside. And then of course there's the  cooling equipment or the hidden layer of fiber,   materials, and the onsite power. So I'm going  to walk through the best names in each of those   layers. And at the end of course I will tell you  exactly how I would invest in this group if I were   starting fresh. But if you want to see exactly  what I'm buying and selling I do give access to   that information in my Patreon group. And I also  provide additional research and analysis every   week like my watchlist of stocks like the ones  that I'm covering in this video. We'll start with   tier one, the contractors who physically build the  data centers. The hyperscalers, Microsoft, Amazon,   Google, Meta, and Oracle are spending over $700  billion on AI infrastructure this year. And this   isn't just a one year boom. McKinsey projects $7  trillion in global data center spending through   2030. And most of the companies on this list  already have orders booked through 2028. I'm not   going to lie, when I first read that $7 trillion  number I had a hard time believing it because that   happens to be 23% of the entire US GDP for 2025.  And somebody has to physically construct all of   that. First on this layer is Comfort Systems USA,  where they install the mechanical, electrical,   and plumbing systems inside hyperscaler data  centers. When a hyperscaler wants one company to   handle everything inside the building, fix is the  one that they call. What they have accomplished is   transformative. Data center customers went from  a third of revenue two years ago to over half of   their revenue this past quarter. And fix ended at  a record $12.4 billion backlog that nearly doubled   year over year. For context, if you'd invested  $1,000 in Comfort Systems in the spring of 2021,   you'd have roughly $22,000 today. That is a  22-begger in five years for an HVAC contractor.   Seriously, who would have guessed that? And here's  the kicker. Operating margin more than doubled in   that window. Return on invested capital sits  at 62% and they're carrying effectively zero   debt. These are software company economics on a  mechanical contractor. Next is IES Holdings, where   they handle the electrical work that brings data  centers to life. The fiber, low-voltage systems,   the wires and boxes that connect the racks. Their  communications segment serves data centers. And   the numbers there have been extraordinary. Where  their total backlog jumped 62%. Now what makes   IESC different is size. They're running at around  $12.6 billion in market cap, which means they're   still small enough to compound aggressively  if data center construction stays at this pace   through 2028. The revenue compounded at 23% every  year for five straight years, while operating   margin nearly tripled. And earnings per share has  multiplied nearly eight times. And that's what   gets this stock to a 10-begger. Now for me, the  metric to watch on IESC is communication segment   growth. As long as that segment just keeps  printing 35% plus, then hyperscaler demand is   intact and the runway just extends. [01:04:05:00 - 01:05:46:22]   Now we've been talking about the physical AI build  out and there's another build out happening on the   science side. And that brings us to today's  sponsor, Telescope Innovations, where I first   covered them back in January and the story has  significantly improved since then. Developing   a drug requires up to 30,000 experiments and  one chemist runs about five a week. Telescope's   self-driving lab does a year of that work in  a single week, where AI designs experiments,   robots execute, and machine learning optimizes  the next round. Based on management's projections,   their technology cuts development costs from  $900 million to $300 million and it shaves five   years off a 10-year cycle. That's 50% more high  margin patent monetization. They shipped their   first commercial self-driving lab in December and  in January Pfizer installed a second one, moving   the partnership from R&D pilot to full deployment.  That's really big news because it validates the   need for this technology. Their second existing  product, Direct Inject LC, is already used by   15 of the 20 largest pharma companies. The team  includes the only living two-time Nobel laureate   in chemistry, as well as founder and CTO Dr. Jason  Hein. Collectively, this team is attributed with   34 patents, 450 academic publications, and  management with solid prior exits within the   space. And Telescope has expanded into lithium  refining with two proprietary processes and a   strategic project with standard lithium, tying  directly into the need for critical minerals.   Which then again ties back to the AI build-out.  Real revenue, top-tier pharma transitioning from   pilots to full deployment, and a stock pushing  all-time highs. That's the setup that investors   are looking for. If you'd like to learn more about  Telescope innovations with a ticker TELIF, please   check out the link down in the description. [01:05:46:22 - 01:06:15:23]   Third on this list is Qantas Services. The largest  pure play infrastructure contractor in the entire   category. Power transmission, communications  and energy infrastructure work for hyperscalers,   utilities and large industrial customers across  multiple sites simultaneously. They're the public   company hyperscalers and utilities call when  they need a billion dollars of work coordinated   across multiple cities. Now here's the stat  that you should be seeing. Qantas backlog now   sits at over $48 billion. [01:06:17:01 - 01:16:58:16]   That's bigger than the entire market cap of most  of the companies on this list combined. Management   also raised full-year revenue guidance into the  $35 billion range. And a major portion of that   backlog is locked in through long-term master  service agreements rather than just a one-time   project. That's the kind of revenue visibility  that locks in years of forward earnings. The   data center segment now represents around 10% of  total backlog. And Qanta has publicly disclosed   that strategic partnerships with American  Electric Power structured to support AEP's $72   billion capital plan, including the transmission  infrastructure that serves the data center market.   Qanta is fundamentally a scale story. Revenue  compounded at 20% annually for five years. And   the stock has returned more than seven times  since 2021. For me, Qanta is the credibility   anchor of the entire AI build-out. If hyperscalers  are spending real money on real construction,   Qanta catches a meaningful share of all of those  dollars. Now we move on to tier two, and that's   the equipment that goes inside the buildings.  Switch gear, transformers, power distribution,   the hardware that every data center needs, whether  the racks are full of Nvidia chips or AMD chips,   it just doesn't matter. The first name on this  layer is Powell Industries, where they design and   build the high-voltage switch gear that controls  the flow of electricity inside the data centers,   utility substations, large industrial  sites, and LNG export facilities. Their CEO   started strategically aligning the company with  hyperscalers and colocation operators around 2022,   and the financials reflect a complete operational  reinvention. Powell was a small-cap nobody in   early 2021 that has run so far and so fast that  the companies had to do a three-for-one stock   split. And here's what really tells the story.  In fiscal 2021, Powell was essentially just   break-even, and their operating margin was nearly  zero. Four years later, that operating margin has   expanded to nearly 20%, while revenue more than  doubled. That is exactly what an industrial pivot   to data centers looks like when the execution just  hits everything just right. And their most recent   quarter confirmed the trend. Powell ended with a  record $1.6 billion backlog, and new orders are   up 63% year over year. That happens to be the  highest quarterly bookings in over two years.   Next is Eaton Corporation, where they make the  power management equipment that goes inside   every major data center on Earth. This happens  to be the switch gear, the busways, UPS systems,   and the electrical distribution gear. The products  that get specified in every Greenfield hyperscaler   build. Eaton is by far the largest name on this  layer at over $167 billion in market cap. And   total data center orders were up over 200%  year over year in their most recent reported   quarter. And Electrical America's backlog reached  a record $13.2 billion. Management has noted that   data center construction backlog represents over  a decade of normalized build rates. Eaton also   recently acquired Boyd, a leading liquid cooling  company expected to generate $1.7 billion in   annual sales. That's with over 80% coming just  from data centers. Their operating margin has   gone from 19% to over 24% in just five years. And  earnings per share has roughly tripled. The stock   has returned more than three times since 2021.  And that's a rare compounding for a $167 billion   industrial company. Especially with the data  center momentum still building. Now we move on to   tier three, which is cooling. The new generation  of NVIDIA AI racks pull 132 kilowatts of power.   And that's nearly 10 times what a traditional  server rack pulls. In the most blunt of terms,   air cooling just can't handle that. Liquid cooling  is the only answer. And first on this cooling list   is Modine Manufacturing, where they design and  build the liquid cooling distribution units,   immersion systems, and the thermal management gear  that the new generation of AI racks just simply   can't run without. They happen to be the smallest  pure play in this video. And the financial pivot   from being a boring auto supplier to AI cooling  specialist is the most dramatic transformation in   the entire basket. Just look at where Modine was  just five years ago. Fiscal 2021 was a complete   disaster. Operating margin came in at a negative  5.4%. I mean, they were literally on the chopping   block for being taken over. And then of course,  four years later, operating margin has flipped to   a positive 11%. And the earnings per share has  moved from a loss of more than $4 to a healthy   gain. And the stock has returned roughly 17 times.  Clearly, the data center pivot is what's carrying   the company. Climate solutions revenue grew 51%  year over year in their most recent quarter,   while data center sales alone were up 78%.  Next on the cooling list is Carrier Global,   where they make commercial and data center cooling  systems at scale as one of the largest commercial   HVAC companies in the world. There is a different  kind of pick than the rest of the names on this   layer. The five year return is roughly 55%.  And it's the lowest in this entire video. An   operating margin has actually contracted from  the high teens to under 10% as they integrated   the Weissman acquisition and they divested the  fire and security business altogether. So what   even earns Carrier a place on this list? You just  need to simply look at their most recent quarter.   Global data center orders were up over 500% year  over year. And of course, another thing I like   to look at is the data center backlog, which now  fully covers their $1.5 billion full year sales   target with room to exceed it. Their integrated  Quantum Leap data center offering, which combines   precision chillers, coolant distribution units,  and building management software, has booked   roughly $300 to $400 million in orders within its  first year. Carrier is now publicly working with   Nvidia on cooling designs for the next generation  AI infrastructure. Now we'll move on to the fourth   tier, which happens to be the hidden layer.  This is the fiber, the cooling components,   and the behind the meter power that none of this  works without. But that also sits just one or two   steps removed from the GPU and they don't show  up in most analyst models. The first name on   the hidden layer is Belden, where they make the  data center fiber, the high speed interconnects,   and the cabling that physically connects the  GPUs inside the hyperscaler campuses. Their   broader business spans industrial automation,  broadband, and smart building infrastructure.   Belden's been a steady recovery story since  2020, revenue compounding at roughly 9% annually,   operating margin expanding from the high single  digits to over 11%, and the company moving   from a net loss to solid profitability. Solid  execution, but not the fireworks of the small   cap names of the earlier layers. Now here's  where it gets a little bit interesting. On   the same day that Belden reported their most  recent earnings, they announced that they're   acquiring Ruckus Networks for $1.8 billion  in cash. That's roughly 40% of the Belden's   market cap going into a single acquisition. Ruckus  adds Wi-Fi 7 access points, enterprise switches,   and cloud management networking to a company that  was already running the fiber backbone. In just   one simple move, Belden goes from cable company  to a full stack networking infrastructure play.   The stock got hit pretty hard on the deal because  the market doesn't yet trust this integration.   While every other name in this video is making new  highs, Belden is sitting at one of the cheapest   forward multiples of the basket at 15.7 times  its forward earnings, despite delivering revenue   up over 11%. This is one you just don't jump  into, but you definitely want to watch it and   do a little extra research. Next on the hidden  layer is Mueller Industries, where they're the   only vertically integrated manufacturer of copper  tube, brass rod, and forgings in North America.   They supply critical cooling components into  the plumbing, HVAC refrigeration, and industrial   systems that the data centers absolutely rely  on. The most recent quarter was extraordinary.   Net income jumped nearly 52% and diluted earnings  per share climbed to $2.16, while gross margin   expanded nearly 300 basis points. Mueller also  raised their quarterly dividend by 40%. The   sixth consecutive year of double-digit dividend  increases. That is the kind of capital return move   that you make when management is highly confident  in forward cash flow. Here's what really tells   their story. revenue compounded at 12% annually  for five years, while their operating margin   roughly doubled to over 21%. And earnings per  share multiplied more than five times. The stock   returned more than six and a half times since  2021. Last on the hidden layer is Bloom Energy,   where they design and manufacture solid oxide  fuel cells that generate electricity on-site,   behind the meter, and without waiting for the  utility grid to even be connected. They're the   only public pure play on behind-the-meter power  generation for data centers in the entire market.   Their most recent quarter came in well ahead of  consensus. Revenue was up 130% year over year,   gross margin reaching 31.5%. But here's where  they really shine. Oracle agreed to procure up to   2.8 gigawatts of Bloom's fuel cell systems, with  1.2 gigawatts already contracted. And more than   half of Bloom's data center backlog now comes  from hyperscalers, NeoClouds, and co-location   providers beyond Oracle. Total contracted backlog  sits at roughly $20 billion, and their scaling   manufacturing capacity at hundreds of megawatts  per quarter. Those Patreon stocks that I opened   with proved that this AI build-out paid off  once it began to scale. These 10 names are   how I would carry it into the next chapter and  how I'm prioritizing them. I'm not saying that   I would invest into all of these, but I am going  to say this is how I'm going to prioritize them   in a ranking order. So how would I actually invest  $100 across this group if I were starting fresh?   I'd start with $30 into tier 1, which is the  contractors. They have the most direct hyperscaler   exposure and the cleanest balance sheets on this  layer. Then I'd put $25 into tier 2, the equipment   makers. This layer combines world-class capital  efficiency with the largest single backlog on the   list. Then I'd put $20 into tier 3, which is  cooling. It's the highest growth sub-segment   of the entire AI build-out. And last I'd put $25  into tier 4, the hidden layer. This is where the   rare value names and the contrarian setups begin  to live. My point of view is that I'm going to   put higher allocations going to the names with  the cleanest balance sheets and the most direct   hyperscaler exposure. And of course, as I trickle  down, the smaller allocations go to the higher   volatility names just like most of my investments.  I have to give a big shout-out to the Patreon   group because they surfaced so many of these  companies that allowed me to dig even further,   and hopefully you got some value from that.  And as always, thank you so much for watching.