Vertiv (VRT) – $37B market cap; $859M ADV: We added Vertiv to the U.S. Focus List as the stock retook its 50- and 100-DMA on above average volume. Vertiv is a market leader in a $17B data center infrastructure market growing at a 14–17% CAGR through 2028. It makes electrical equipment used to power, cool, and maintain the critical infrastructure in data centers. Mainstream adoption of liquid cooling for AI data centers, improving demand from hyperscalers and colocation operators in APAC, and margin expansion due to increased sales from high-margin offerings are the key growth drivers. Consensus expects revenue and adjusted EPS CAGR of 13% and 34%, respectively, in FY23–25. Fundamental & Technical note
Author: vipin khare
O’Neil Capital Equipment Sector Weekly
Praj Industries (PNS.IN; PRJ IN) – $2B market cap; $12M ADV: We added Praj Industries to the Emerging Markets Focus List as the stock bounced off its 50-DMA on above average volume. It is trading 2% below the pivot of a stage-two, six-week flat base. The company provides engineering, procurement, and construction services for setting up ethanol production plants. Praj is India’s largest technology licensor, with every six out of ten ethanol plants in the country set up by it. Government push for ethanol-blended petrol in India, recent relaxation of curbs on the use of sugarcane juice for ethanol production, and increasing international order book are the key growth drivers. Consensus expects revenue and EPS CAGR of 17% and 24%, respectively, in FY24–26. Fundamental & Technical note
O’Neil Capital Equipment Sector Weekly
AeroVironment (AVAV): Reported better-than-expected Q1 FY25 results. Revenue (+24% y/y) beat estimates by 3% and adjusted EPS (-11% y/y)
beat estimates by 51%. The stock is testing support at its 50-DMA (-2%) and is forming the right-side of a stage-three cup-with-handle base, with the
pivot 15% away. Add positions on a high-volume retake of its short-term moving averages.
Select Companies Presenting in Industrial Conferences This Wee
Key points from this report:
- The following select ideas are showing near term relative strength while displaying good O’Neil Fundamental ratings and rankings: CARR, SWK, CW, MOGA, RTX, MMM, AXON, R.
- The following select ideas are showing near term technical weakness with poor O’Neil Ratings and Rankings: HON, OTIS, IR, ROK, VRT, FTV, LECO, WSC, AGCO, VNT, AMN.
- Included are annotated datagraph for the FL stocks and stocks that are trading in or near the pivot range. Stocks include: LHX, URI.
O’Neil Capital Equipment Sector Weekly
AeroVironment (AVAV) – $5B market cap; $66M ADV: We added AeroVironment, a global market leader in a rapidly growing $11B+ unmanned
aircrafts and loitering munitions market, to the U.S. Focus List as the stock gapped above its 50-DMA support on more than 2.5x the average
volumes after receiving a ~$1B order for supply of its Switchblade loitering munitions. Ukraine’s successful use of Switchblade has sparked its
demand globally. Small countries with limited defense budgets are utilizing cost-effective, high-volume unmanned systems and weapons. AVAV
benefits from being the sole global player capable of producing thousands of these systems. The new order takes the revenue visibility to ~80% of its
FY25 guidance, up from just ~55%. Margins are expected to improve as the mix evolves towards product sales and away from service sales.
Consensus expects sales and EPS CAGR of 14% and 19%, respectively, in FY24–26. Fundamental & Technical note
O’Neil Capital Equipment Sector Weekly
AeroVironment (AVAV; +8% pre-market): The Department of Defense awarded AeroVironment a contract worth $990M for supply of advanced longrange weapons, with delivery expected to be completed in 2029. The stock is expected to gap above its 50- and 100-DMA. Immediate resistance is at
$191.8 (+8%). It is forming a stage-three consolidation base, with the pivot 21% away.
O’Neil Capital Equipment Sector Weekly
Mazagon Dock Shipbuilders (MZK.IN; MAZDOCKS IN) – $10B market cap; $212M ADV: We booked a 90.8% gain and removed Mazagon Dock
Shipbuilders from the Emerging Markets Focus List as the stock pulled back 23% from its all-time high, breaching support along its 50-DMA on above
average volume. Indian defense stocks have been declining after the government kept its defense budget allocation unchanged in the Union Budget in
July. The lack of substantial new shipbuilding orders in the latest quarter could have further dampened investor sentiment. Next support is at its 100-
DMA (-20%). Fundamental & Technical note
O’Neil Capital Equipment Sector Weekly
Axon Enterprise (AXON) – $28B market cap; $216M ADV: We added Axon Enterprise to the U.S. Focus List as the stock broke out of a stage-one consolidation base into a new all-time high, following a beat-and-raise Q2 FY24 print. Axon makes public safety devices including TASERS and provides cloud-based evidence management services. Diversification beyond the U.S. state and local law enforcement to verticals like the U.S. federal and international markets is expected to drive growth. The launch of its new AI-based tools and hardware range is expected to drive demand for its high-margin software solutions. It has a recurring cash flow-based revenue model, with 95% of its total revenue tied to subscriptions. Consensus expects revenue CAGR of 25% and EPS CAGR of 19% in FY23–25. Fundamental & Technical note
O’Neil Capital Equipment Sector Weekly
Eaton (ETN) – $109B market cap; $689M ADV: We removed Eaton from the U.S. Focus List due to technical deterioration. Despite beat-and-raise Q2 FY24 results,
the stock declined ~9% post print breaching support along its 200-DMA on above average volume, largely due to general market weakness. Mixed segment
performance in Q2 could have weighed down on investor sentiment. Support is at $255.46 (-8%), followed by $240.44 (-14%). Fundamental & Technical note
O’Neil Capital Equipment Sector Weekly
Keyence (KEYE.JP; 6861 JP) – $104B market cap; $197M ADV: We removed Keyence from the Developed Markets Focus List as the stock breached support along its 200-DMA on above average volume. It is declining after facing resistance at that level following its Q1 FY25 print. Revenue (+11% y/y) beat estimates by 1%, while EPS (+10% y/y) beat estimates by 2%. Operating margin was 70bps below expectations and could have weighed on investor sentiment. Higher labor costs impacted margins during the quarter. Support is at its previous low of ¥63,520 (-4%), followed by support at ¥62,080 (-6%). Fundamental & Technical note
