In 2024, electrical infrastructure stocks like Powell Industries and IES Holdings are setting the pace, topping Forbes’ ranking of mid-sized companies. These companies are positioned favorably alongside brands like Abercrombie & Fitch, Dutch Bros, Sweetgreen, and Shake Shack. The surging appreciation for artificial intelligence (AI) has played a crucial role in this market dynamic. Nvidia has emerged as a major player with its market capitalization exceeding $3 trillion, yet its influence extends beyond the semiconductor sector. As AI applications proliferate, companies supporting the necessary infrastructure are witnessing significant growth.
Powell Industries, headquartered in Houston, has captured the top spot on Forbes’ annual list due to its role in providing extensive electrical infrastructure for large-scale projects, including power control rooms. A notable portion of Powell’s $1 billion annual revenue is derived from oil and gas clients. However, the company has experienced remarkable growth in its commercial segment, particularly within data centers, which saw sales surge from $57 million in fiscal 2022 to $150 million in fiscal 2024. This uptick is closely tied to the demands of data centers, where complex electrical systems are becoming increasingly crucial as their physical and computational requirements expand.
With Powell’s stock climbing 185% in 2024 and a staggering 600% rise since early 2023, the company reflects a broader trend among peers in the sector. IES Holdings, which garners close to half of its $2.9 billion revenue from residential electrical installations, ranks second on the Forbes list. Under the leadership of CEO Jeffrey Gendell, who acquired a majority of the company through his hedge fund in 2018, IES’s stock has experienced impressive growth, increasing tenfold since that acquisition, including a notable 209% gain this year. The rising power consumption of major tech firms such as Microsoft and Google underscores the booming investments in electrical infrastructure for data centers.
AI-focused stocks are distributed throughout the ranks of the most successful mid-cap companies, analyzed by Forbes from a pool of 731 entities with market capitulations between $2 billion and $10 billion. The selection criteria included earnings growth, sales growth, return on equity, and total stock return over five years, with additional weight placed on the last year. Although mid-cap valuations have increased alongside the broader market, these companies offer a compelling opportunity for investors. The S&P MidCap 400 index has shown resilience, posting an 18% gain in 2024, although it trails the larger S&P 500 index by a notable margin. Nonetheless, mid-cap companies have historically outperformed both small- and large-cap indices since 2000 due to their optimal balance of growth potential and stability.
Amid this thriving landscape, several mid-cap firms have significantly outperformed expectations. Sezzle, a buy-now, pay-later platform, saw its stock soar by 2,200% after it went public on Nasdaq in mid-2023. It achieved a 71% revenue increase year-on-year, amounting to $70 million, and reported profitability for each quarter thus far in 2024. Similarly, GeneDx Holdings, a genetic testing firm specializing in exome sequencing, attained a remarkable 3,600% increase in shares, nearing profitability after years of substantial losses. One standout performer in the renewable energy sector is Terawulf, a bitcoin mining operation that re-established its lease for a hydro-powered facility, emphasizing its potential for sustainable energy solutions aligned with market trends.
Other well-known brands like Abercrombie & Fitch and food and beverage chains such as Dutch Bros and Shake Shack also demonstrate resilience, adapting successfully to market challenges. For example, Abercrombie has reported a 20% increase in sales this year, while Dutch Bros and Sweetgreen have managed to maintain their market shares against industry headwinds, underscoring the consumer’s evolving preferences. As these mid-sized companies continue to thrive, a few are poised to join the ranks of future megacaps, analogous to Nvidia’s trajectory in the last decade. The combination of established consumer interests and the booming demand for tech-related infrastructure positions these companies favorably for continued growth ahead.