Brendan Caldwell’s July 2024 Stock Picks: Xylem, Vertiv, Qualcomm

Exploring the Strategic Insights of Brendan Caldwell's Investment Picks for July 30, 2024

Editorial Team (ET)May 9, 2025

Brendan Caldwell, President and CEO of Caldwell Investment Management, is a seasoned investor with a keen eye for high-quality, large-cap North American stocks. Today, we dive into his top picks for July 30, 2024, which include Xylem, Vertiv, and Qualcomm. These companies stand out in their respective industries and offer promising growth potential despite the current market uncertainties.

Market Outlook

The market has performed remarkably well this year, continuing the momentum from 2023. This optimism stems from the perception that the U.S. Federal Reserve has managed to curb inflation without triggering a recession. Strong labor markets and steady GDP growth have further bolstered investor confidence. However, the anticipated aggressive rate cuts have not materialized, leading to concerns about sustained high interest rates. This scenario could disappoint investors who expected significant rate reductions.

High valuations in the market necessitate strong earnings growth to justify current prices. If companies fail to deliver, the market may experience a pullback, as evidenced by recent trends. This uncertain environment underscores the importance of professional investment advice, particularly in identifying high-quality, resilient companies.

Top Picks Overview

Brendan Caldwell’s top picks for this period are Xylem, Vertiv, and Qualcomm. These companies were selected based on their strong market positions, innovative products, and potential for sustained growth. Let’s explore each of these picks in detail.

Xylem (XYL NYSE)

Xylem is a leading water technology company specializing in the transportation, treatment, and monitoring of water. Its products include pumps, valves, stormwater pumps, and utility meters. Xylem’s focus on water scarcity, reliability, and resilience makes it a vital player in addressing global water challenges.

Xylem offers a range of products that cater to both residential and commercial needs. These include advanced utility meters that help track water usage accurately, providing crucial data for managing resources efficiently.

Xylem’s growth is driven by three main factors:

Scarcity: As the global population grows, the demand for water increases, making efficient water management critical.
Reliability: Natural disasters and water quality issues highlight the need for reliable water infrastructure.
Resilience: Upgrading existing water systems ensures they can withstand future challenges.

Municipal water utilities are investing in upgrading outdated infrastructure, and Xylem is poised to benefit from this trend. The deployment of smart meters, particularly in markets with lower penetration, presents significant growth opportunities.

Xylem’s new management team has implemented a plan to streamline operations, focusing on higher-value customers and improving operational productivity. This strategy is expected to enhance operating margins and drive revenue growth through cost synergies.

Vertiv (VRT NYSE)

Vertiv is a global leader in providing cooling solutions for data centers and communication networks. Its products ensure the seamless operation of critical infrastructure, making it an essential player in the digital economy.

Vertiv’s cooling products are crucial for maintaining the stability of data centers and industrial processes. As the demand for data processing increases, so does the need for reliable cooling solutions. The growing need for data centers has led to longer order lead times from large customers, providing better visibility for future growth. Vertiv’s strong backlog, particularly in AI-related projects, indicates robust demand.

Vertiv is positioned to capitalize on the increasing capital spending in hyper-scale data centers. Its operational execution has improved under new leadership, contributing to better margins and growth prospects. Operational leverage and a positive pricing environment are driving margin improvements for Vertiv. The shift to more advanced servers is expected to further enhance profitability.

Vertiv plans to deploy around $3.5 billion on mergers and acquisitions over the next five years. This strategy focuses on bolt-on deals but also allows for larger acquisitions, supported by strong cash flow and debt capacity. Continued deleveraging efforts have led to credit rating upgrades for Vertiv, moving closer to investment-grade status. This progress enhances the company’s financial stability and attractiveness to investors.

Qualcomm (QCOM NASD)

Qualcomm is a leading semiconductor company known for its innovation in communication technologies. While historically focused on smartphone chips, Qualcomm is rapidly expanding into automotive, industrial, and PC markets.

Qualcomm has a rich history of leading advancements in network protocols and mobile technology. Its expertise in semiconductors positions it well for future growth in various sectors. Qualcomm’s expansion into automotive, industrial, and PC markets presents significant growth opportunities. The company is leveraging its technological prowess to tap into these lucrative segments.

Recent data indicates a recovery in the global smartphone market, with positive growth trends. Edge AI technology, which operates on devices rather than in the cloud, is driving a shift towards higher-priced smartphones, benefiting Qualcomm. Qualcomm’s Snapdragon Elite-enabled laptops are gaining traction, presenting a new growth driver. The integration of edge AI in PCs offers additional growth prospects. The automotive and IoT sectors are increasingly contributing to Qualcomm’s growth. The company’s innovations in these areas are expected to drive long-term value.

Investment Rationale

Brendan Caldwell’s top picks, Xylem, Vertiv, and Qualcomm, stand out due to their strong market positions and growth potential. These companies are well-managed and possess the resilience to navigate economic uncertainties. While there are inherent risks, the strategic initiatives and market opportunities for each company justify their inclusion in a robust investment portfolio.

Conclusion

In summary, Brendan Caldwell’s top picks for July 30, 2024, offer a blend of stability and growth potential in the current market environment. Xylem’s focus on water technology, Vertiv’s critical role in data center infrastructure, and Qualcomm’s innovations in semiconductors make them compelling choices for investors. As always, professional investment advice can provide valuable insights into navigating the complexities of the market.

Bloomberg

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