Many investors have never heard of Eaton (NYSE:ETN), but that’s actually great news. Eaton stock can be a hidden gem in your portfolio this year, especially if you’re in the market for a “backdoor” or indirect artificial intelligence play.
Just to recap, designs and commercializes intelligent power systems. It’s an old company that’s been around since 1911. Yet, during the power-intensive Era of AI, Eaton is in the right time and the right place to potentially generate substantial revenue.
Eaton Goes Global
The need for intelligent power storage and use isn’t just a regional phenomenon. AI data centers around the world will consume huge quantities of electricity, so Eaton should have plenty of work to do in the coming quarters.
Let’s do some globetrotting for a moment, if you don’t mind. In the U.S. Eaton is helping Endurant Energy “deploy 10 battery storage projects in New York City.” All told, these energy storage projects are valued at over $7 million.
Hopping over to the United Kingdom, Eaton recently acquired Exertherm, which provides thermal monitoring solutions for electrical equipment. Thus, Eaton can now avail itself of Exertherm’s continuous temperature monitoring solutions, which could be deployed in AI data centers.
Staying in Europe for a moment, we can observe that Eaton opened a new manufacturing base in Finland. This facility will help Eaton increase its “capacity to manufacture and supply” the company’s Uninterruptible Power Supply (UPS) systems.
Finally, we’re complete our itinerary in the Dominican Republic, where Eaton recently opened another manufacturing site. Among other uses, this facility will enable Eaton to boost its output of Bussmann series fuses, which may be deployed in data centers.
Eaton’s Bustling Backlog
Now that we’ve jet-setted around the world, it’s a good time to focus on Eaton’s financials. After all, it’s pointless to invest in Eaton if the company isn’t fielding many orders.
Eaton is getting plenty of orders. In the first quarter of 2024, Eaton’s Electrical Americas segment order backlog grew 31% year over year. Furthermore, the company’s Electrical Global backlog increased 12%, and Eaton’s Aerospace segment backlog grew 11%.
Consequently, Eaton recorded 8% YOY sales growth, with the company’s Q1-2024 net sales totaling $5.943 billion. Perhaps best of all, Eaton’s bottom line remained firm as the company’s adjusted earnings increased 28% YOY to $2.40 per share.
Eaton Stock: The Best Backdoor AI Play for 2024
AI data centers around the world will consume a whole lot of electricity. It’s not too surprising, then, that Eaton is expanding its presence in multiple regions.
It also makes perfect sense that Eaton’s order backlog is growing along with the company’s sales and profits. So, today’s a great day to add a secret, backdoor AI investment to your portfolio with Eaton stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
