Once again, the data center theme is taking center stage with this Weekly Wrap-Up, this time featuring power solutions company, $TGEN…and why not? You always go with the person rolling the hot dice at the craps table, and the data center infrastructure theme is treating us well.
I was able to sneak away from a Mother’s Day Smorgasbord to put the finishing touches on this weekly wrap-up after chowing down on food from some of the finest chefs in town.
I guarantee you that Warren Buffett would be buying this stock if he found it in the beginning of his career, starting from a small capital base. Key reasons why I like this stock: it’s a cash-generating machine, an under-the-radar leading manufacturer that just made a move giving it a huge competitive advantage, has executed large share repurchases at higher and higher prices, invested tens of millions of dollars in expansions, is rapidly growing earnings per share, and is still trading at dirt-cheap multiples.
I initially visited the data center FUD topic a few weeks ago in a Weekly Wrap-Up post, talking about the data center tailwinds positively impacting Sterling Infrastructure, Inc. (NASDAQ:STRL) construction operations and how management addressed the data centers growth skepticism in its Q4 2024 earnings call
Despite a market backdrop still marked by caution, we continue to perform research, hoping to find some nice underappreciated gems during a time where there is less competition from investors who probably have thrown in the towel in the short term. But I’ll be ready to sell them the shares I’m buying on the dips when the crowd returns.
Currently trading at a P/E of around 9.7x, we see clear room for this company to experience a re-rating due to growing earnings that are becoming more predictable. Public peers in this infrastructure industry typically trade at far higher valuations, often in the P/E of 15–20x range. Our target company has now significantly expanded its manufacturing footprint, positioned itself closer to key customer clusters, and cleaned up both its cost base and legal overhangs.
This stock we are pitching today is dropping fast for the wrong reasons and now has a P/E of near 5x. This is despite being a growth company with the lowest risk it has had in years. However, we believe the P/E could eventually expand to over 20x, setting us up for a rare multibagger move of at least 300%.
Sometimes the best opportunities in microcap investing aren’t buried in futuristic tech or obscure biotech patents. Sometimes, they’re hiding in plain sight.
There’s a little-known company we’ve been tracking for a while now—a turnaround story that’s been quietly grinding through operational changes, product rollouts, and a broader reinvention of its brand identity. It’s not the kind of name you’ll hear pitched by even other microcap investors, but recent developments in a new supplement market it recently entered just made this stock a lot more interesting for investors who appreciate the power of information arbitrage.