The AI Gold Rush Is Here... These 3 Stocks Sell The Shovels

[00:00:00] Speaker 1: AI is the biggest investment theme of our lifetime. Trillions of dollars. NVIDIA, the hyperscalers, the data center names. Everybody's crowded into the same handful of stocks. But none of it works without the boring physical stuff. The pipe, the wire, the metal box that keeps a $40,000 chip from melting into a puddle. And Wall Street finally figured that out. So they bid up the obvious suppliers, the Veritif, Modine, Powell, to 30, 40, even 43 times earnings. But there is one company that makes the gear inside every single one of these data centers and is trading at just 14 times earnings. Half the S&P. A third of what they're paying for the cooling stocks. Today I'm going to show you three of the cheapest, most overlooked ways to own the AI data center boom. The stocks that make the literal plumbing every server farm depends on that you can actually buy without paying a nosebleed multiple. Two of them are rock solid value names which you can hold for years. And the third is a beaten down $11 stock for speculators in the room. High risk, but the kind of low price name that can really move. In fact, this stock has already tripled just in the last couple of months. I'll show you exactly why I like this stock and where the smart money is quietly going next. So make sure you subscribe to the channel because the picks and shovel side of the AI trade is exactly the kind of off-the-radar setups I like to share with our viewers and keep you ahead of. Now, here's the thing about a data center. Everybody pictures the chips, all the NVIDIA GPUs, the flashy stuff. But a modern AI rack now pulls 30 to 50 kilowatts of power. That's not a server closet anymore. That is an industrial furnace. Old school air conditioning can't touch it. You need liquid cooling. You need miles of heavy power cable. You need fireproof conduit. You need enclosures and racks and cooling loops and all of them. In that whole market, just the cooling piece goes from about $3 billion today to somewhere between $7 and $13 billion by 2030. And the power and cabling side is bigger still. This is, in essence, the picks and shovels trade. In a gold rush, you don't have to guess which miner strikes it rich. You sell the picks. You sell the shovels to all of them. It doesn't matter who wins. OpenAI, Google, Amazon. They're all fighting the same AI war. And every one of them buys the same conduit, the same cable, and the same cooling. It is simply a game of supply and demand. The demand is exploding. Gear is unglamorous, and the supply side is finite. It's that simple. The only problem? Wall Street already crowded into the famous supplier. Look at that. Modine, a fantastic company, trades at 37 times forward earnings. Those lofty expectations. It's up 180% in the last year. Powell Industries, 43 times. Invent, around 30. They're not bad businesses. They're great businesses. But the easy money's already been made. They're being priced at perfection. And you are paying at the top of the range. And by the way, if you like content like this, and you want the trades I'm actually taking, you need to join my Black Ops trading service. For just $5, you get an entire year of access. That's live, one-hour group mentoring sessions with me every Monday, where I walk you through my real positions, the entries, the exits, exactly what I'm looking at. You'll get my weekly newsletter every Friday. You can have my proprietary trading view indicators, bonus reports, a ton more stuff, $5 for the full year. So click the link in the description, scan that QR code in the corner, or go to TradeWithRoss.com to get signed up. Now let me show you the two names I think the crowd skipped. Stop number one, Atcore, ticker ATKR. Now Atcore is about as boring as it gets. And I mean that as the highest compliment. They make electrical conduit, cable and cable management, the steel and PVC tubing and trays that carry and protect every wire running through a building, including increasingly data centers and solar farms. If electricity moves through it, Atcore probably makes the thing it travels inside. Now here's why I like it. The stock trades, as you can see, at around $79, $80 per share, with a market cap of just $2.5 billion. Now that's tiny for a company doing nearly $3 billion in annual revenue. And it trades at about 14 times its earnings. Half the broad market and a third of what most people are paying for the cooling names. Analysts have it earning north of $5 a share this year. Now somebody is going to say it in the comments. I'll say it for you, Ross. Why is it so cheap? Why is the valuation so low? Well, fair question. A chunk of Atcore's old business was riding the post-COVID boom in PVC pipe prices. And those prices normalized. They came down. So the headline earnings came down off this unsustainable peak. Wall Street threw the whole stock in the discount bin. But underneath that, the electrical and data center side is exactly where the demand is going. You are buying a real, profitable, cash-generating industrial business at a value stock multiple. Something almost impossible to find at today's valuations. With these high stock prices, it is quietly pivoting toward the fastest-growing market on Earth. That's the setup I want. The second stock is Belden, ticker BDC. Now, Belden makes the signal plumbing, copper cable, fiber, connectors, and the racks and enclosures that move data around a building and inside a data center. They even sell the airflow and power management gear for these mission-critical sites. So between Atcore moving the power, Belden moving the data, you got both halves of the physical layer covered. Now, Belden's not quite as cheap as Atcore. It trades around, at the time of this recording, let's take a look, about $117 a share. Roughly 18 times earnings. Still well under the 30 to 40 times earnings you're paying for the cooling and power crowd. And it is growing. Revenues up 11% last quarter. Earnings were up 11%. And they just agreed to buy Ruckus Networks for about $1.8 billion to push deeper into the networking space. This is a steady, double-digit grower trading for a reasonable price in a sector where almost nothing is reasonable anymore. The only thing I don't like about Belden is the chart. I mean, I'll just be honest. This thing is ugly. It's gone nowhere for over a year. In fact, the only trend I can spot for the last four or five months is a down one. The story sounds good. The numbers look good. But so far, Wall Street and the investing crowd does not like it. So I found another stock with a much prettier chart. The momentum on this one is huge. And it trades for just $11 a share. That's a bit of a speculative play. Lottery ticket kind of thing. Big risk, big reward kind of play. And the company is Method Electronics, ticker MEI. Now, this is a small cap. The whole company is worth just around $400 million. And here's the part that fits our theme with MEI. Method makes laminated bus bars in high current power cabling. This is the heavy copper hardware that actually carries electricity inside a data center rack. Now, their data center sales have jumped from just 3% of the business to 7%, more than doubled, heading toward 9% this year. Now, as we zoom out, look, this was a $50 stock a couple of years ago. It fell all the way to 5% because Method is going through a transition. Their old automotive and EV business has been a drag. They're losing money on the bottom line. And they've been working on this turnaround. That's why the stock is so cheap today. But look at the more recent action. Look at that momentum we have there. This thing tripled between March and May. It has now been consolidating for the last few weeks. It appears to be gearing up for a run higher. How many stocks do you own? That off the March low are currently up 136%. Now, this company provided forward guidance. They're estimating roughly a billion dollars in sales this year with positive free cash flow. And the part of the business growing the fastest is the data center power hardware. If company management gets this turnaround right, which investors seem to believe it is. While the data center demand keeps ramping up, this $10, $11 stock with a good story that used to be $50 can move a long way. So that's the bet. Just size it like the speculation it is. And here's why I like this whole group. The demand here isn't a forecast. It is already being built. The cable, the conduit, the bus bars, the cooling, that gear gets ordered. Before a single chip gets installed. Atcore and Belden are profitable. They're generating real cash. And Method gives you a cheap, high-octane shot at the same trend. Cheap, levered to the biggest build-out of the decade. And a fraction of what the crowd is paying for the 40 times earnings names. And that is a setup I'll take all day. Now, as usual, this is not investment advice. These are Ross Givens' personal opinions. Do with it what you will. But do me a favor. If you enjoyed this video, drop a like. Make sure to subscribe to the channel so I can keep you up to date. And if you want the trades I am taking to learn how to spot these opportunities, come join me this Monday for the next live Black Ops session. It is interactive. I'll look at your stocks. I'll show you what I'm getting into. The link is in the description. It is just $5 for the entire year. And I promise you'll get many times your money's worth in value. I'll see you in the next video.