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Globe and Mail
14 minutes ago
- Globe and Mail
GE Vernova's Q2 Electrifies Stock, What's Next For This Top Name?
If GE Vernova's (NYSE: GEV) latest earnings results are any indication, General Electric's corporate restructuring continues to look like a stroke of genius. On July 23, the energy equipment spin-out saw shares soar over 14% after reporting Q2 financials. As of the July 23 close, GE Vernova has provided a total return of nearly 92% in 2025. This makes it the second-best performing stock in the S&P 500 Index, behind only Palantir Technologies (NASDAQ: PLTR). Let's break down GE Vernova's Q2, which validates the bullish sentiment on the stock. Ultimately, we'll aim to answer whether investors should continue betting that the stock's huge run will continue or if it is time to take profits and look for opportunities elsewhere. GEV's Q2: This Energy Enabler Is Firing on All Cylinders In Q2, sales came in at $9.1 billion, equating to a growth rate of 11%. This figure was approximately $328 million higher than Wall Street analysts anticipated. Just as important were the increases in the company's orders and backlog, as these are strong indicators of future revenue. Orders rose by 4% to $12.4 billion, 1.4 times higher than the company's revenue in Q2. Meanwhile, GE Vernova's backlog grew 11.4% to $129 billion, 3.5 times higher than the company's expected revenue in 2025. These figures are positive signs for investors in the near and long term. Right now, sales are outpacing expectations. Orders remain substantially higher than revenues, indicating that revenue growth can continue at this pace in the near term. The company's backlog indicates that long-term revenue potential is increasing slightly faster than current revenue. This suggests that GE Vernova can maintain or even accelerate its revenue growth in the coming years. Beating sales expectations and margin improvements helped GE Vernova post earnings per share of $1.86, surpassing estimates of $1.63. Additionally, the firm increased the midpoint of its free cash flow guidance by $1 billion to $3.25 billion. This might be the most encouraging sign of all for investors. Bringing in more cash than it spends is the ultimate goal of any business, and GE Vernova is making robust progress. AI Energy Needs Are Driving Huge Wins for GEV's Natural Gas Solutions Diving further into the company's report helps explain what is driving GE Vernova's incredible success. The company's Power segment is by far its largest, accounting for around 53% of total revenue last quarter. In this segment, the company sells natural gas turbines and provides servicing. Power also offers nuclear, hydroelectric, and steam power equipment and services. Orders in Power rose dramatically by 44% last quarter. Natural gas orders nearly tripled versus Q2 2024, driving this. Utility companies must scale up their electricity generation capacity to keep up with surging demand due to artificial intelligence (AI). AI data centers need energy that is both reliable and clean. This is why so many hyperscale data center companies have signed agreements for nuclear energy. However, the availability of nuclear sites is dropping, and new sites can take a decade to build. Thus, reliable and relatively clean natural gas is a logical alternative for scaling up energy capacity. Given its leadership in natural gas turbines, GE Vernova is an ideal company for meeting the demand for AI energy here and now. GE Vernova is also working to design and build nuclear small modular reactors (SMRs). SMRs help get around the long construction times of large reactors but are still in the developmental phase. This positions the company to meet the longer-term interests of hyperscalers. Additionally, GE Vernova's scale likely gives it a competitive advantage over smaller SMR developers. GEV: Valuation Is Lofty, But So Are Its Long-Term Opportunities As of July 23, GE Vernova trades at a forward price-to-earnings (P/E) ratio of 80x. That number is likely to come down as analysts revise earnings estimates upward. However, it is still 60% above the firm's average forward P/E of 50x since April 2024. This suggests that shares could be highly overvalued. However, it's tough to argue with the company's long-term prospects, especially given the potential of its SMR business. At the same time, it's hard to say the stock's massive surge and ballooning forward P/E don't warrant taking some money off the table. Maintaining some exposure to this name while looking for cheaper opportunities elsewhere feels like a prudent balance for investors to strike. Where Should You Invest $1,000 Right Now? Before you make your next trade, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list. They believe these five stocks are the five best companies for investors to buy now...
Globe and Mail
an hour ago
- Globe and Mail
Is This Top Warren Buffett Stock a No-Brainer Buy Right Now?
Key Points As this is Berkshire's second-biggest position, Buffett has certainly found some traits he appreciates. This premium credit card brand boasts superb charge-off rates that are the envy of the industry. Shares of American Express have performed exceptionally well in recent years, creating valuation risk. 10 stocks we like better than American Express › There are dozens of companies in Berkshire Hathaway 's public equities portfolio. A lot of attention might go to Apple or Coca-Cola. However, investors need to pay attention to another business that's at the top of the list. Warren Buffett-led conglomerate Berkshire Hathaway owns 21.6% of the outstanding shares of this well-known financial services company. This stock has climbed a phenomenal 217% just in the past five years (as of July 23). Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » But is it a no-brainer buying opportunity today? Holding a strong position in the credit card industry The company that Berkshire has such a huge stake in is American Express (NYSE: AXP). The top Buffett stock's underlying business certainly possesses some very favorable characteristics. For starters, Amex has a wide economic moat. This is something the Oracle of Omaha appreciates. It indicates a company's ability to defend itself against competitive forces, supporting its durability. The American Express brand is a key asset for the business. Some of the company's credit cards are at the premium end of the market, holding a special status among consumers. Offering impressive rewards and perks while charging hefty annual fees attracts people with higher incomes. American Express also benefits from a powerful network effect, which is true for other card and payment platforms. As the number of merchant acceptance locations grows, so does the utility for cardholders. And with more cardholders, merchants find more value because there are more opportunities to generate sales. Another favorable trait is just how steady American Express' financial performance is. The economic backdrop recently hasn't been the smoothest, with concerns about tariffs making investors and executives jittery. But Amex continues to shine. During the second quarter, the financial giant reported a 9% year-over-year increase in revenue. This was driven by a 7% bump in spending. For all the talk about macroeconomic weakness leading to a possible recession, Amex is giving investors every reason to remain optimistic. The percentage of card members loans that are 30 days or more past due is significantly below the industry average. Net write-off rates also declined sequentially and compared to the second quarter of 2024. The company is extremely profitable, something Buffett likes. American Express generated $2.9 billion in net income in the second quarter. The leadership team uses the excess cash to buy back shares and pay a dividend. These are certainly investor-friendly capital allocation practices. Why investors should tread with caution Shares of Amex have been a huge market outperformer in recent years. As a result of this strong performance, the stock isn't cheap. The market is asking investors to pay a price-to-earnings (P/E) ratio of 21.5 to buy the stock. That's definitely not a bargain, as it's well above the trailing-three-year average multiple. But it's also not egregiously expensive. Investors who want to own high-quality companies for a long time should undoubtedly have American Express at least on their watch list. The business should continue to post solid revenue and earnings growth for the foreseeable future, while the brand presence and network effect help it maintain its competitive standing. These are wonderful qualities to focus on. But it's really anyone's guess what valuation multiple the stock will trade at five or 10 years down the road. This is a critical factor to think about. If the P/E ratio expands, it can add tremendous upside. On the other hand, paying too high of a multiple up front can create a headwind, as the P/E ratio could contract over time. At the current price, American Express is far from being a no-brainer stock to buy. Should you invest $1,000 in American Express right now? Before you buy stock in American Express, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Express wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025
Globe and Mail
2 hours ago
- Globe and Mail
Why Is Wall Street Obsessed With AI (Artificial Intelligence) Leader Arista Networks?
Key Points Arista Networks is a leading network platform provider. Several Wall Street analysts hiked their price targets on Arista Networks stock in July. Those on Main Street should investigate the company for themselves to see if it aligns with their investing goals. 10 stocks we like better than Arista Networks › We all have preferences. From our favorite movies to favorite places to eat to favorite places to visit, people love what they love. Wall Street is no different. Currently, analysts can't get enough of artificial intelligence (AI) stocks. But of all the AI stocks on the Street's radar, Arista Networks (NYSE: ANET) is one AI name that analysts absolutely love. Let's take a look at the basis for this affection for one of the leading network platform providers. Enthusiasm for Arista Networks has heated up in July While Arista Networks' stock received some upgrades in June, it's during July that Wall Street's enthusiasm has been clearly seen. Here are some of the analysts' more recent actions. JPMorgan boosted its price target to $130 from $117 on July 17. Citigroup hiked its price target to $123 from $112 on July 11. Wolfe Research initiated coverage on Arista Networks and assigned an outperform rating on July 7. According to JPMorgan predicated its new price target on the expectation that cloud spending will be strong in the second half of 2025, while Citigroup based its new price target on a growing Ethernet switching market. Besides Wall Street, Arista Networks is growing increasingly popular with customers. The company's industry-leading switches are in high demand as data centers look to shore up their computing infrastructure to support AI computing. And demand for the company's networking solutions seems unlikely to taper off anytime soon. During its first-quarter 2025 financial report, Arista Networks projected its total addressable market will rise from $41 billion in 2024 to $70 billion in 2028. Is now a good time for Main Street investors to listen to Wall Street? The enthusiasm that Wall Street has for Arista Networks is well warranted, but does that mean investors should rush to buy shares? The answer is a resounding No. Investors must -- as always -- do their own due diligence to see if Arista Networks is right for them, but for AI exposure, it certainly demands consideration. Should you invest $1,000 in Arista Networks right now? Before you buy stock in Arista Networks, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Arista Networks wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Citigroup is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Arista Networks and JPMorgan Chase. The Motley Fool has a disclosure policy.
