Itron: Riding the grid investment super cycle and enabling smart grids

Counter cyclical compounder with strong visibility and improving mix pointing to rerating

Welcome to the 7th investment case and 6th resilience, 4th reshoring/sovereignty and 3rd AI & data center idea on Crack the Market (and the most comprehensive Itron investment case you will find online)! Join me as I dissect this smart meter and distributed intelligence provider for electrical utilities benefiting from infrastructure investments and the transition to a smart/future proof grid in a growing power demand environment (electrifying/decarbonizing/deglobalizing world), improving margin and FCF profile thanks to an improving mix (more technology and services) and a resilient/countercyclical business model that should show its strength in an uncertain macro environment.

Twice a week, I will release deep dives into stocks and sectors that fit into the three themes that I see winning in this age of tariffs and deglobalization: resilience, sovereignty & reshoring, China. I will then deep dive into the opportunities in the AI data center value chain.

Take advantage of this once in a generation opportunity to build long term wealth by investing in great stocks that will deliver returns for your portfolio for years to come.

You can already read my first 6 deep dives, all of which I see as winners in this new world of tariffs and deglobalization:

• ASML (reshoring & China idea): The most innovative company in the world will 2.5x its EPS by 2030.

• LKQ (resilience idea): The most defensive business in the auto industry is a tariff winner and could become a compounder.

• Atlas Copco (resilience & reshoring idea): The best industrials business in the world is on sale, extremely resilient and will benefit from US reshoring.

• Badger Meter (resilience idea): The perfect business in the perfect end market, water meters are the definition of resilience.

• Knorr Bremse (resilience idea): Who knew making brakes was this lucrative? Rerating with self help story and upside from German infra plan.

• Flex (reshoring idea): The electronics manufacturing giant building Nvidia’s servers and enabling reshoring is becoming a better business.

After reading this article, you will understand why this company is so critical to our vital infrastructure and helping utilities manage a once in a generation power demand surge, what it does, why it is a big beneficiary of the grid investment cycle that we are in, why the quality of the business is steadily improving (margin and resilience), and why it is one of the best businesses to own in the age of electrification, decarbonization with further upside from reshoring of manufacturing to the US.

This company is a counter cyclical play on structural investments into aging and stressed electricity grids and cheaper and quicker solutions to manage the growth in power demand in an electrifying and decarbonizing world, more smart and connected grids (edge intelligence), strong visibility and good momentum in an uncertain economic and political environment, and improving fundamentals with more recurring and high margin sales.

In this article I go through:

1. Itron’s business and its critical role in deploying smart grid infrastructure, providing flexibility and resilience to an aging and more complex asset.

2. Why Itron is becoming more profitable and resilient thanks to a long transformation of the business that just ended and an improving mix.

3. Why its deep relationship with risk averse customers is underappreciated by the market at a time of technological transition and surging investments in electricity grids (linked to an aging infrastructure, electrification and decarbonization of the economy and soon the reshoring of manufacturing).

4. Why this company is becoming vastly more important in an electrifying, decarbonizing and deglobalizing world.

Itron Investment Case