TipRanks Smart Growth Portfolio #27: Warp Speed Grid
Dear Investors,
Welcome to the 27th edition of the Smart Growth Portfolio and Newsletter.
1
1
Portfolio Updates
❖ ❖ ❖ We are excited to announce the addition of Applied Digital Corporation (APLD) – which was recommended in one of our previous Newsletters – to the Smart Growth Portfolio.
We first highlighted APLD back in March, but held off adding it back then as the stock was caught up in speculative swings that would have added too much volatility to an already volatile portfolio. After two back-to-back strong earnings reports and a healthy ~13% pullback from recent highs, the setup now looks too good to pass up.
Applied Digital is not a traditional data center operator. The company builds facilities designed specifically for high-performance computing and AI – the type of workloads that require enormous power and cooling efficiency. Its flagship Ellendale, North Dakota campus is being scaled into a multi-gigawatt hub, backed by a $900 million financing deal with Macquarie Asset Management and supported by partnerships with Nvidia, Dell, and Super Micro. This isn’t just real estate – it’s the backbone infrastructure for the next wave of AI development.
Fiscal Q4 results showed the company’s growth strategy is paying off. Revenue came in at $38.1 million, a slight beat versus expectations, while adjusted EBITDA more than doubled year-over-year to $21.4 million. EPS flew past consensus at -$0.03 compared to the expected -$0.15, highlighting stronger operating leverage as scale kicks in. The Cloud Services division, which rents out GPU clusters for AI training and inference, grew over 500% from last year and is quickly becoming the centerpiece of APLD’s business. This segment alone highlights why investors are so excited: demand for AI compute is exploding, and APLD has proven it can deploy GPU capacity faster than many bigger rivals.
What makes APLD compelling is the combination of speed, focus, and partnerships. The company has already secured multi-year contracts with major hyperscalers, providing long-term revenue visibility. Institutional investors like BlackRock and others are on board, while Nvidia itself has a direct equity stake. Those relationships don’t just bring capital – they bring validation that APLD’s infrastructure is up to the highest standards.
The company is still operating at a loss, and scaling this aggressively carries risks. But with analysts projecting continued upside – the TipRanks consensus price target is $20.75, about 44% above current levels – and with AI demand showing no signs of slowing, we think the long-term opportunity outweighs the short-term noise. APLD is one of the purest plays on the infrastructure needed to power the AI era, and that’s why it’s now part of our Smart Growth Portfolio.
1
1
Portfolio News
❖ Micron (MU) may emerge as a relative winner from Washington’s latest semiconductor crackdown. The U.S. Commerce Department has revoked exemptions that allowed Samsung and SK Hynix to ship American chipmaking equipment to their massive plants in China. The change, which takes effect after a 120-day grace period, will block the Korean giants from expanding or upgrading Chinese facilities, though current operations can continue. Micron has far lower reliance on Chinese production and is already seeing surging demand for its high-bandwidth memory used in AI systems. With rivals facing fresh constraints, MU could tighten its grip on the premium HBM market at a critical point in the AI boom.
1
❖ KeyBanc reiterated its “Buy” rating on Monday.com (MNDY) with a price target of $330 – implying more than 70% upside from current levels. The firm’s bullish stance rests on management’s guidance for 26% revenue growth in 2025, despite investor concerns that growth could slow to the low-20% range. KeyBanc highlighted that revenue growth from Monday.com’s flagship Work OS platform – its cloud-based solution for project management, collaboration, and workflow automation – has accelerated in recent quarters, while momentum from newer products has moderated. Work OS was the primary driver of Q2 revenue acceleration, whereas other offerings such as the CRM suite continued to expand but at a slower pace. With MNDY sharpening its focus on Work OS, sustaining elevated revenue growth will hinge on maintaining that platform’s momentum.
1
1
Under Review
❖ We are keeping Innodata (INOD) under review despite a sharp rebound following its steep post-earnings sell-off, as we wait for clearer signs of direction.
The company’s earnings release was a classic “beat and raise,” delivering a 79% year-over-year increase in revenue and a staggering 375% surge in adjusted EBITDA. Over the quarter, INOD reinforced its balance sheet with swelling cash reserves and locked in new projects with large existing customers, highlighting a robust pipeline expected to fuel strong performance in the second half of the year. Innodata’s business momentum continues, prompting the company to raise its full-year 2025 revenue growth guidance to at least 45% organic growth, up from the previously posted 40%.
Despite concerns around customer concentration, macroeconomic uncertainties, heavy reliance on the AI cycle, and near-term margin pressure from aggressive investment in new programs, these are “known knowns” that normally wouldn’t have caused a ~30% drop post-earnings. The sell-off looked like classic profit-taking after an 80%+ surge from April lows into earnings, which drove valuations to somewhat overheated levels and was likely read by the market as over-exuberance amid lingering anxiety. On top of that, news of Meta’s investment in Scale AI added to investor nerves over potential disruption in the AI data labeling and service space.
However, analysts remain optimistic, rating INOD a “Strong Buy” with an average price target implying a potential upside of nearly 50%. Wedbush and others cite the company’s deepening leadership in AI – particularly in specialized, high-accuracy AI data annotation and training services. Innodata’s strategic positioning as a crucial AI enabler is supported by its partnerships with major tech firms and expanding AI-related contracts.
INOD’s strong long-term outlook remains intact – if anything, it has only strengthened after the latest report. That said, market sentiment is still fragile. Thursday’s surge of more than 10%, led by renewed optimism on AI growth and a broad upswing in tech stocks, supports our view that the prior sell-off was overdone. Still, we prefer to keep the stock under a magnifying glass a while longer to ensure the rebound continues and performance realigns with the company’s fundamentals and growth outlook.
1
❖ We are keeping Clearwater Analytics (CWAN) under review, maintaining a “hold-with-vigilance” strategy.
We have placed CWAN under review following a sharp post-Q2 2025 earnings selloff, triggered by investor uneasiness regarding its acquisition strategy. While the stock has since rebounded, clawing back most of the recent loss, sentiment remains shaky.
Clearwater’s operational results, posted on August 6, were near-perfect – with sales and adjusted EBITDA surging over 70%, ARR up by 83%, gross revenue retention steady at 98%, and non-GAAP gross margin remaining robust at 77.4%. The company reaffirmed a confident Q3 outlook, projecting 75-76% YoY revenue growth.
On the flip side, GAAP net loss widened and total debt ballooned as Clearwater pushed forward with its capital-intensive integration strategy around Enfusion, Beacon, and BISTRO. CWAN is yet to prove its ability to absorb large acquisitions since becoming a public company. Integration risk is the company’s key near-term challenge – reinforcing operational uncertainty while not yet posing as a meaningful revenue growth catalyst. The bullish case hinges on Clearwater’s ability to scale acquired assets from 13% to 20% revenue growth, improve margins, and convert debt-driven expansion into durable SaaS profitability. While these deals strengthen Clearwater’s front-to-back investment operations platform position, the path to earnings leverage remains under close scrutiny.
Still, business momentum remains positive, buoyed by high-profile customer wins and partnerships – most notably with Bloomberg, which plans to integrate Clearwater’s accounting platform into its enterprise investment solutions. These developments tilt our view toward holding the stock. The latest earnings results validate Clearwater’s acquisition and integration strategy by delivering growth and margin expansion amid complexity. Its growing infrastructure platform, expanding institutional partnerships, and strong retention metrics preserve upside potential.
While the stock sell-off prompted downward price adjustments from D.A. Davidson, Morgan Stanley, and Loop Capital Markets – analyst stance remains overwhelmingly positive, with the stock rated a “Strong Buy” and an average PT signaling an upside of about 45%. Moreover, Goldman Sachs upgraded CWAN from “Hold” to “Buy” post release, citing the company’s potential for sustained 20%-plus annual growth driven by its automation platform and cross-sell opportunities. RBC Capital has recently reaffirmed its “Buy” rating with a price target of $36 – suggesting an upside of over 75% – citing impressive revenue growth.
In a recent development, Clearwater has announced a new $100 million share repurchase program aimed at buying back approximately 5 million shares at recent market prices, with the intention to mitigate dilution and reduce public float. This move is underpinned by the company’s strong financial performance, particularly robust free cash flow generation. While CWAN has historically prioritized debt reduction over capital return, strong excess cash flows and surging EBITDA growth allow for continued deleveraging alongside shareholder compensation.
For now, we remain cautious but far from bearish. Clearwater is executing well on operations, integration, and client expansion, but the stock remains under review until we see a meaningful sentiment shift that could lead to a reacceleration in valuation momentum.
1
1
1
This Week’s Top Growth Pick: MasTec (MTZ)
MasTec, Inc. is a large-scale builder of the infrastructure that powers the digital economy. From fiber and 5G networks to data centers and next-generation transmission lines, the company operates where connectivity and reliability matter most. Its teams design and deliver complex projects that link cloud campuses, utilities, and communities, giving MasTec a central role in the expansion of digital services. Beyond telecom, it also develops utility-scale projects that boost grid capacity and efficiency, enabling customers to handle surging energy demand at lower cost. Unlike traditional contractors tied to narrow specialties, MTZ spans multiple high-growth sectors with the scale and expertise to take on demanding builds. Positioned at the intersection of digital transformation and infrastructure upgrades, MasTec enables faster, smarter, and more resilient networks.
Source: MasTec Investor Presentation, August 2025
1
Pipelines to Data
MasTec’s roots go back to 1929, but the company’s reinvention over the past five years has defined its modern identity. Once best known for oil and gas pipelines, MTZ has transformed into a diversified infrastructure builder tied directly to the growth of digital and power-hungry industries.
The shift began in earnest after 2020, when management saw that future demand would come less from pipelines and more from communications, grid upgrades, and mission-critical facilities. Acquisitions were central to this transition – the 2021 purchase of Intren LLC expanded MasTec’s footprint in electrical distribution and “last mile” grid modernization, a critical piece of digital infrastructure. A year later, MTZ completed the $1.1 billion acquisition of Infrastructure and Energy Alternatives, which broadened its capabilities in utility-scale power delivery and complex grid projects, forming the backbone of its current growth strategy.
Communications has since become one of MasTec’s largest engines, with fiber rollouts and 5G deployments anchoring its national footprint. This position has increasingly connected the company to hyperscalers and telecom carriers racing to link cloud campuses and expand broadband. The data center angle is now unmistakable – MasTec has already delivered more than $150 million in projects, built a $200 million backlog, and is actively bidding on nearly $1 billion in additional work. These contracts span site preparation, power connections, and network integration, making the company an early mover in one of the fastest-growing infrastructure markets.
MasTec’s evolution is also defined by execution scale. Its workforce and equipment base allow it to take on the kinds of multi-billion-dollar builds that smaller rivals cannot, while its experience across communications, power delivery, and clean infrastructure creates cross-segment advantages. Rather than focusing narrowly on pipelines, MasTec has repositioned itself as a high-tech enabler – building the backbone that supports cloud growth, AI adoption, and the modernization of America’s power grid.
This pivot has reshaped MTZ into more than a contractor. It is now a strategic partner to industries where digital demand, energy intensity, and connectivity converge – a role that positions MasTec at the center of one of the most durable growth cycles in infrastructure.
Source: MasTec Investor Presentation, August 2025
1
Power to the Cloud
MasTec is in the business of constructing the backbone of modern life – the networks, power systems, and infrastructure that fuel both digital services and energy-intensive industries. Unlike pure-play contractors, MTZ has deliberately diversified across four operating segments, each giving it exposure to long-term growth cycles.
The biggest momentum today comes from Communications, where MTZ builds out fiber, 5G, and the connections that link hyperscalers’ cloud campuses and sprawling data centers. This segment alone accounts for roughly one-quarter of revenue, and the scale of its contracts sets it apart – MasTec wins projects that smaller rivals can’t manage. Its backlog growth reflects how central it has become to the digital economy’s physical layer.
Clean Energy & Infrastructure is nearly one-third of the business and covers utility-scale generation, transmission, and civil projects. In practice, these builds are about performance and efficiency – grid upgrades that cut costs and prepare for surging demand from AI-driven workloads and reshored industrial capacity. By delivering large projects at scale, MasTec has carved out a reputation as a reliable partner for utilities under pressure to modernize.
Power Delivery, another third of revenue, extends that reach into the high-voltage lines and local distribution systems that keep power flowing. Here, the company is a direct beneficiary of multi-decade grid investment – bolstered by federal programs like the Infrastructure Investment and Jobs Act (IIJA) – and has the crews, equipment, and expertise to execute at a national level.
Pipelines now represent less than 15% of sales, a sharp reversal from five years ago when they were the leading source of revenue. They remain profitable, but the emphasis has shifted toward faster-growing and more durable demand sources. This pivot underscores MasTec’s evolution from a legacy pipeline contractor into a high-tech enabler.
Policy tailwinds amplify the opportunity. MTZ’s growth is being propelled by a significant and sustained macroeconomic tailwind in the form of U.S. infrastructure investment, federal support to re-industrialization and reshoring, and other policies – with the company’s business model directly and positively aligned with the spending priorities of the U.S. government. Moreover, the One Big Beautiful Bill (OBBB) fiscal package restored immediate R&D expensing and bonus depreciation – lowering capital costs and freeing cash to reinvest in new equipment and technology. Combined with IIJA funding, IRA incentives, and reshoring momentum, the environment is stacked in MasTec’s favor.
The total addressable market is vast – communications infrastructure, grid modernization, and data center builds together exceed $1 trillion in U.S. spend this decade. With only a single-digit share today, MTZ’s runway for growth is as much about market expansion as it is about execution.
Source: MasTec Investor Presentation, August 2025
1
Pipe Up the Ante
MasTec has delivered a consistent pattern of upside over the past several quarters, and the second quarter of 2025 extended that trend with another record performance. Total revenue rose 20% year-over-year to $3.54 billion, beating both company forecasts and analyst expectations, while adjusted EBITDA of $275 million met guidance. Adjusted earnings per share came in at $1.49 – about eight cents ahead of the Street – notching the seventh straight quarter of consensus beats.
These results reflected the growing weight of MasTec’s non-pipeline businesses, where EBITDA climbed 42% YoY and revenue advanced 26%. The Communications segment was the standout, with revenue up more than 40% and margins expanding, followed by Clean Energy & Infrastructure and Power Delivery, each posting 20% top-line growth. The Pipeline segment’s revenue declined by 6% and its margins compressed as the Mountain Valley project – a large-scale interstate natural gas pipeline on which MTZ provided engineering and construction services – rolled off. However, the pipeline business remains profitable, and MasTec is investing to prepare for a rebound in 2026, with expectations for the segment to return to or exceed 2024 levels.
Backlog remains the clearest indicator of momentum. The 18-month book reached a record $16.5 billion at quarter-end, up 23% from a year earlier and 4% sequentially. Communications backlog grew to a record $5 billion, Clean Energy & Infrastructure backlog climbed to $4.9 billion, and Power Delivery backlog hit $5.1 billion, leaving MasTec well positioned to sustain growth through the remainder of the year and beyond. The book-to-bill was roughly 1.2x, with expectations for further backlog gains in the second half of 2025.
Cash flow was softer in the quarter, with operating cash flow of just $6 million compared to $264 million in the prior-year period. Free cash flow turned negative as MTZ ramped up hiring to meet demand in pipeline and communications, and significantly hiked working capital to support expanding operations – which required more cash for receivables, inventory, and work-in-process as project volumes rose. Q2 also saw capital deployment into equipment and ongoing investments to build capacity for new largescale projects – a deliberate and well-understood practice for a company in a high-growth phase. MasTec ended the quarter with $191 million in cash and leverage at roughly 2x. Management reiterated confidence in generating $700-750 million of operating cash flow for the full year as project timing normalizes, indicating that the Q2 cash burn was a temporary, tactical allocation of resources rather than a systemic issue.
Following the surge in revenue and earnings over the quarter, MTZ raised guidance across the board for both the ongoing quarter and the full year. The company now expects $3.9 billion in revenue, $370 million of adjusted EBITDA, and $2.28 of adjusted EPS, with revenue above consensus and EPS roughly in line. Full-year 2025 guidance now calls for revenue at $13.9-14.0 billion (a $300 million increase from the prior outlook at the midpoint) and adjusted EBITDA at $1.13-1.16 billion (up from $1.12-1.16 billion). The adjusted EPS outlook was raised by about 4% to $6.23-6.44, now implying about 60% growth over 2024.
With repeated execution above plan, a record backlog, and improving segment mix, MasTec has entered the back half of 2025 with earnings power accelerating toward its long-term target of double-digit EBITDA margins and EPS above $8 in 2026.
Source: MasTec Q2 2025 Earnings Presentation
1
GARP in the Grid
MasTec’s stock has gained over 31% year-to-date, far outpacing the broad stock-market benchmarks as well as some of its peers – ranging from industry titan Quanta Services and Fortune 500 leader EMCOR, to pipeline specialist Primoris and specialty contractor Dycom.
The strong stock performance has driven MTZ’s TTM and forward Non-GAAP P/E ratios well above Industrials sector averages – but since the company grows at a Tech-sector-like pace rather than a stable Industrials clip, that premium is clearly justified. Compared to peers, MasTec’s P/Es land in the middle of the pack; the same is true for its TTM and forward EV/EBITDA and its TTM Price/Sales multiples. MTZ sits toward the bottom on TTM and forward EV/Sales, underscoring its relatively moderate valuation.
However, the company’s PEG ratios signal more than that, suggesting that MTZ’s growth rates are being relatively overlooked by the market, leaving the stock undervalued on this metric. The TTM GAAP PEG ratio of 0.35 is low both in absolute terms and in comparison to the sector median and peers. On a forward basis, MasTec also looks underappreciated, with a Non-GAAP PEG of 0.64 – the lowest among peers despite carrying the strongest EPS growth outlook. That combination of relatively elevated P/E with a low PEG profile is a classic marker of a GARP (Growth At a Reasonable Price) stock.
On top of the potential for share-price appreciation, MasTec rewards shareholders through occasional buybacks. After a period of muted repurchases – with less than $10 million in 2024 – the company ramped up activity this year, supported by accelerating profitability. In Q2 2025, MTZ repurchased over $43 million worth of shares, bringing total year-to-date buybacks to almost $83 million, and announced a new $250 million buyback authorization.
For growth-focused investors, that combination of high-velocity earnings, overlooked valuation, and a renewed buyback engine makes MTZ a rare find – a company building the digital economy’s backbone while still trading like it hasn’t caught up to its own momentum.
1
To Sum It All Up
MasTec offers a growth investment case built on visibility, execution, and mispricing. The company is central to long-cycle secular demand – from broadband and 5G to hyperscaler data centers and grid modernization – all markets expanding regardless of near-term economic noise. Backlog is at record highs, and MTZ continues to prove it can convert bookings into revenue and earnings growth while scaling profitably. Yet the stock trades on industrial-style multiples, even though its growth mirrors technology enablers. That disconnect creates a textbook GARP setup – investors pay average valuations for above-average growth. With diversification across segments, disciplined capital allocation, and optional upside from pipeline projects resuming in 2026, MasTec is positioned as a durable compounder – a growth story hiding in plain sight.
1
1
Smart Growth Portfolio
|
1
1
Disclaimer
The information contained in this article represents the views and opinions of the writer only, and not the views or opinions of TipRanks or its affiliates and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy, or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices, or performance.
