Looking Forward to Invest in Chart Industries (GTLS)
- Growth Opportunities: Chart Industries (GTLS) is positioned to benefit from AI and data center demand due to its carbon capture products. It’s one of Morningstar’s top 5 undervalued energy stocks in this space.
- Risk Factor: The stock is volatile, down 30% recently due to timing shifts on new orders. Only risk-tolerant investors should consider it.
- Specialty Products: Chart is expanding into high-growth areas like hydrogen and liquefied natural gas (LNG), bolstered by strategic investments and joint ventures.
- Acquisition Impact: The 2023 acquisition of Howden doubled the company’s size and is expected to bring over $1 billion in sales synergies over the next few years.
- Profitability and Moat: Chart’s narrow economic moat comes from switching costs and lucrative service contracts. The Howden acquisition boosts its aftermarket revenue and returns on invested capital.
Key Metrics:
- Fair Value Estimate: $200
- Star Rating: 4 stars
- Expected Revenue Growth: 19% annually over the next five years
- Margin Expansion: Operating margin projected to rise to 18% by 2028
Risks: Market uncertainty in specialty areas like hydrogen and carbon capture, and the financial risks associated with the Howden acquisition.