Cummins and Jacobs Solutions Bring Supportive Data for These Holdings
We continue to mine management comments from companies outside the portfolio.
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We continue to mine management comments as companies outside the TheStreet Pro Portfolio report their latest quarterly results. The goal is to refresh our investment outlook as well as identify any potential potholes that might lie ahead when our holdings report.
Comments and results from Cummins CMI reaffirm the positive outlook for data center power demand, while backlog levels at Jacobs Solutions J underscore the same for infrastructure and non-residential construction.
Cummins
For those not familiar with Cummins, it is a power solutions company serving the heavy and medium-duty truck markets, fuel cells, electric power generation systems, air handling systems, and others. The operating segment we are interested in is its Power Systems Segment (17% of sales) because of its exposure to the data center market. Cummins management sees 2025 revenue for that business being a bright spot for the company, increasing 5%-15% year over year due to “continued high demand in the data center market.” That strength will offset weaker demand in other markets, including an expected weak first half of 2025 for heavy and medium-duty trucks.
While Cummins’ comments are not revolutionary, they do support the strong outlook furnished by portfolio holding Eaton ETN when it reported last week. As we discussed in today’s video, we’ll look to capital spending comments from Alphabet GOOGL tonight and again on Thursday from Amazon AMZN. Triangulating those comments and others from last week should help give us a clear picture of data center demand prospects and what that means for our positions in Nvidia NVDA, Marvell MRVL, and Eaton.
Jacobs Solutions
As part of its quarterly results, engineering and construction company Jacobs Solutions shared that its trailing 12-month backlog rose 19% year over year to $21.8 billion. That equates to 7.5 quarters of revenue based on the $2.9 billion in gross revenue posted in the December quarter.
We see that echoing the mega projects cited by United Rentals URI and others in recent weeks, which brings multiple quarters' worth of visibility, keeping us bullish on URI shares as well as those for Vulcan Materials VMC, Eaton, and Waste Management's WM non-residential waste business.
At the time of publication, TheStreet Pro Portfolio was long ETN, GOOGL, AMZN, URI, VMC and WM.
