Al Root

Investors are always looking for ways to play big trends -- AI, electrification, and reshoring, for example. Now, add seven U.S. and European industrial stocks from Evercore ISI that fit the bill.

On Monday, the broker launched coverage of the industrial names, which all provide power and automation technologies, with Buy ratings. They are gas turbine makers Siemens Energy and GE Vernova, power technology providers Hubbell and Schneider Electric, and automation technology providers Honeywell, Emerson Electric, and Siemens.

The approach is called "picks and shovels," which refers to selling tools to miners during the California Gold Rush in the mid-1800s. Equipment sellers, on average, made out better than the miners.

Today, it's Evercore ISI's way to play higher electricity demand from AI data centers and the return of manufacturing to the West, from Asia.

He sees "sustained growth in power demand driving the strongest equipment cycle in 20 years."

Alexander Virgo, senior managing director, "sustained growth in power demand driving the strongest equipment cycle in 20 years."

The "picks and shovels" approach gives "you leverage to strong underlying cycles with tight supply chains and good pricing power," wrote Virgo in his launch report.

Wall Street projects electricity demand in the U.S. to increase to about 3% a year on average over the next two decades. The average annual growth rate had been roughly 1% for the past 20 years.

It's the "new age of electricity," he said.

Virgo's price targets for GE Vernova and Siemens Energy are $860 and $235, respectively, implying upside of about 28% for Vernova and 65% for Siemens Energy.

Siemens Energy trades for a lower price-to-earnings ratio than GE Vernova, about 31 times estimated earnings for the next 12 months, compared with 54 times for GE Vernova, even though they do similar things.

Virgo's price targets for Schneider and Hubbell are $347 and $575, respectively, implying gains of more than 20% for both. Schneider stock trades for about 25 times earnings. Hubbell shares fetch about 25 times.

His price targets for the three automation players -- Honeywell, Emerson, and Siemens -- are $255, $170, and $347, respectively, implying gains of roughly 20% to 30% for each. Emerson and Siemens shares trade for about 21 times earnings. Honeywell trades for about 19 times.

Hubbell and Honeywell look out of consensus calls. About 44% of analysts covering Hubbell rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. And half, or 50%, of analysts covering Honeywell rate shares Buy.

The rest of Virgo's recommendations have strong Buy-rating ratios on Wall Street, with almost 70% of analysts rating shares Buy, on average.

Strong Buy-rating ratios don't guarantee success for investors. But there are a good place to start looking for ideas. So are new Buy ratings from analysts.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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December 15, 2025 11:04 ET (16:04 GMT)

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