Disconcerting as the latest market downturn may be, savvy investors know that it's times like these when it's critical to remember that investing is a marathon. Instead of panicking, it's best to steady your nerves and be mindful of the fact that enduring market corrections is table stakes for successful long-term investing.
Undeniably, the present dip in the market has left some high-quality stocks sitting in the bargain bin. In fact, two Fool.com contributors believe that electrical connections specialist nVent Electric(NYSE: NVT) and energy storage leader Fluence Energy(NASDAQ: FLNC) are two especially smart additions to investors' portfolios right now after their respective stock price declines of 22% and 64% over the past year.
Power your portfolio with Fluence Energy stock
Scott Levine (Fluence Energy): Unlike the bearish market sentiment that solely accounts for so many stocks sinking lower, the poor performance of Fluence Energy stock is largely attributed to the company's first-quarter 2025 financial report. In the presentation, management revealed a downwardly revised forecast for 2025. In the prior quarterly report, management projected annual revenue of $3.6 billion to $4.4 billion. It now estimates sales will total $3.1 billion to $3.7 billion. Similarly, there's a less robust outlook for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA): $70 million to $100 million as opposed to the original forecast of $160 million to $200 million.
Of course, no one wants to see a cut in guidance, but it's important to acknowledge a few things that speak to the company's merits. For one, the revision doesn't stem from an operational shortcoming related to Fluence. Instead, management credits the lower guidance, in part, to "customer-driven delays in signing certain contracts." Plus, if Fluence achieves the midpoint of the new revenue forecast, it will mean that the company will have grown annual sales by 26% -- still pretty impressive. Moreover, despite the lower revenue and adjusted EBITDA expectations, the company reaffirmed its original forecast that annual recurring revenue (ARR) will reach about $145 million by the end of 2025, representing a 45% increase over that which it had at the end of 2024 -- an auspicious indication of the company's growth.
With AI-driven energy demands for data centers expected to continue escalating for the foreseeable future, patient investors have a great opportunity to pick up a battery energy storage leader at a much more attractive price right now.
nVent doubles down in data centers
LeeSamaha(nVent Electric): The explosive growth in AI applications means an associated growth in data, and that translates to increased demand for data centers. It's not hard to find the more glamorous ways to play the theme -- Nvidia is probably the stock most investors are leaning toward to play the AI boom. However, investors shouldn't overlook a more prosaic choice like nVent Electric.
nVent designs, makes, and sells electrical protection and connection systems, which are vital cogs in the electrification of infrastructure, including data centers. In fact, data solutions made up 20% of its $3 billion in sales in 2024. Given that they grew 30% in 2024, it's reasonable to expect them to be a bigger part of its sales in 2025.
That argument is also supported by the news that nVent is increasing its exposure to data centers by buying Avail's infrastructure solutions business for $975 million. According to the deal press release, the acquired company makes bus systems, switchgear, enclosure systems, and critical power solutions "primarily in the infrastructure vertical, including power utilities and data centers." Its estimated $375 million in sales over the last 12 months will significantly increase nVent's exposure to data centers.
As such, investors bullish on AI and demand for data centers should consider a stock trading at just 18 times estimated 2025 earnings -- a rare value in the sector.
Which beaten-down growth stock is right for you?
While Fluence Energy still projects growth in 2025 -- and rising energy demand from data centers is a tailwind for further growth in the years to come -- Fluence has a shorter history of generating profits compared to nVent Electric; therefore, risk-averse investors may prefer the latter stock right now. For those seeking a high-risk, high-reward opportunity, however, Fluence is one energy stock to get charged up about.
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Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Fluence Energy and Nvidia. The Motley Fool has a disclosure policy.
