Momentum investing revolves around the idea of following a stock's recent trend in either direction. In "long context," investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.Even though momentum is a popular stock characte ...

My research is based on key market themes and works to identify setups that provide asymmetrical risk/reward profiles within these niches. My portfolio is currently built around 5 key themes: (1) Semiconductor Supply Chain, (2) Grid / Power / Energy Transition, (3) Critical Materials, (4) Biotechnology, and (5) Artificial Intelligence / Cloud Computing. My investment style blends deep value investing tenets learned through my experience at a formal investment firm with the forward-looking lens necessary to ...

Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the aim of buying high and selling higher, capitalizing on established price movements [1] - The Zacks Momentum Style Score helps define momentum characteristics, with Thermon Group (THR) currently holding a Momentum Style Score of A [2][3] Group 2: Thermon Group Performance - Thermon Group has a Zacks Rank of 2 (Buy), indicating strong potential for outperformance in the market [3] - Over the past week, THR shares increased by 19.07%, while the Zacks Instruments - Control industry remained flat [5] - In a longer timeframe, THR shares rose by 36.75% monthly, significantly outperforming the industry's 0.62% [5] - Over the last quarter, THR shares increased by 37.02%, and by 19.57% over the past year, compared to the S&P 500's gains of 7.27% and 15.21%, respectively [6] Group 3: Trading Volume and Earnings Outlook - THR's average 20-day trading volume is 221,969 shares, which is a useful indicator of market interest [7] - In terms of earnings estimates, THR has seen 2 upward revisions in the past two months, raising the consensus estimate from $1.85 to $2.06 [9] - For the next fiscal year, there has been 1 upward revision with no downward revisions, indicating positive earnings outlook [9] Group 4: Conclusion - Considering the positive momentum indicators and earnings outlook, Thermon Group is positioned as a 2 (Buy) stock with a Momentum Score of A, making it a strong candidate for near-term investment [11]

Revenue and Sales Performance - Revenue for YTD 2026 was generated approximately 44% from outside the United States, compared to 50% in YTD 2025[104] - Sales for the three months ended September 30, 2025, increased by 15% to $131.7 million compared to $114.6 million in 2024, driven by higher demand and contributions from acquisitions[121] - For the six months ended September 30, 2025, sales increased by 5% to $240.6 million compared to $229.8 million in 2024[135] - EMEA segment revenue doubled to $18.1 million, reflecting a 100% year-over-year increase, largely due to the F.A.T.I. acquisition[123] Profitability and Income - Gross profit rose by 20% to $61.1 million, with a gross margin improvement of 200 basis points to 46.4%[121] - Net income for the three months ended September 30, 2025, increased by 58% to $14.9 million, up from $9.5 million in 2024[121] - Gross profit for the six-month period rose by 8% to $109.1 million, with a gross margin improvement of 120 basis points to 45.3%[135] Costs and Expenses - Incremental direct tariff costs incurred were approximately $0.7 million for the three months and $1.6 million for the six months ended September 30, 2025[115] - Selling, general and administrative expenses increased by 14% to $35.5 million, but as a percentage of sales, it slightly decreased to 27.0% from 27.3%[121] - Interest expense decreased by 28% to $2.0 million due to a lower average outstanding principal balance and reduced interest rates[121] Cash Flow and Capital Expenditures - Free Cash Flow for YTD 2026 totaled $12.7 million, a decrease from $15.4 million in YTD 2025, primarily due to increased investments in working capital[162] - Operating cash flows decreased by $3.054 million in YTD 2026 compared to YTD 2025, attributed to higher investments in working capital[154] - The company expects capital expenditures to be approximately 2.5% to 3.0% of revenue in fiscal 2026[153] Financial Position and Debt - As of September 30, 2025, the company had $29.7 million in cash and cash equivalents and $99.4 million in available borrowing capacity under its Revolving Credit Facility[150] - The company had $125.0 million of outstanding principal under its Term Loan Facilities as of September 30, 2025, with a 1% change in interest rate impacting annual interest expense by $1.4 million[174] - In YTD 2026, the company had a net interest expense decrease due to a lower average debt balance of $139.3 million compared to $169.1 million in YTD 2025, and a reduced average interest rate of 5.79% versus 6.87%[145] Tax and Regulatory - The effective tax rate for the company was 24.1% in YTD 2026, down from 25.0% in YTD 2025, influenced by discrete tax items[147] Strategic Initiatives and Growth - The company aims to strategically pursue emerging growth opportunities, including acquisitions in diverse regions[98] - The company has a diversified product offering with over 250 products, software, and services across multiple brands[102] - The company entered into an amendment to its existing Credit Agreement on July 24, 2025, to align with long-term strategic initiatives[117] Risks and Challenges - The company is exposed to commodity price risks due to reliance on market prices for raw materials without long-term purchase commitments or hedging instruments[175] - Recent periods have seen shortages in certain raw materials and increased costs attributed to tariffs, alternative suppliers, higher freight costs, and increased lead times[175] - The company cannot guarantee the ability to mitigate temporary raw material shortages or pass cost increases to customers, which may adversely affect operational results[176] - A 10% appreciation of the U.S. dollar relative to the Canadian dollar would result in a net decrease in net income of $1.4 million for YTD 2026[170] Currency and Foreign Exchange - The company had approximately $14.6 million in notional forward contracts to mitigate foreign currency exchange rate fluctuations as of September 30, 2025[172] - The unrealized effects of foreign currency translations resulted in gains of $12.1 million in YTD 2026, compared to $1.7 million in YTD 2025[173]

Financial Data and Key Metrics Changes - Reported revenues increased by 15% year-over-year, reaching $131.7 million for the quarter [16] - Adjusted EBITDA rose by 29% to $30.6 million, with adjusted EBITDA margins at 23.2%, up from 20.8% last year [17][18] - Gross profit increased by 20% to $61 million, resulting in a gross margin of 46%, up from 44% [17] - GAAP earnings per share increased by 61% to $0.45, while adjusted earnings per share rose by 45% to $0.55 [18] Business Line Data and Key Metrics Changes - Large project revenue was $24.7 million, a 41% increase year-over-year, driven by several CapEx projects moving to execution [17] - OPEX revenues were $107 million, up 10% year-over-year, representing 81% of total revenues [16][17] - Organic revenue growth, excluding FOTI, was 9% year-over-year [16] Market Data and Key Metrics Changes - U.S. land sales increased by 8%, while Canada saw a 10% increase in revenue [19] - EMEA revenue doubled, driven by strong performance in organic business and contributions from FOTI [19] - APAC experienced a 4% decline, primarily due to uncertainties surrounding global trade policies with China [19] Company Strategy and Development Direction - The company is focused on a 3D strategy of decarbonization, digitization, and diversification to drive organic growth [9][25] - The establishment of a global engineering center in Mexico aims to handle increased project workloads [8] - The company is actively pursuing opportunities in the data center market, particularly with liquid-cooled data centers and medium voltage heaters [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong second-half results and raised full-year 2026 financial guidance [23][24] - The company is well-positioned to benefit from favorable secular demand trends, including reshoring, electrification, and decarbonization [7][25] - Management noted that the current tariff structures are expected to remain stable, which is crucial for maintaining customer sentiment [24] Other Important Information - The company ended the quarter with total liquidity of $129 million and a net leverage ratio of 1.0 times [8][22] - The backlog increased by 17% year-over-year, with a 4% organic increase due to positive book-to-bill ratios [18][19] Q&A Session Summary Question: Expectations for large CapEx projects, particularly in LNG - Management indicated robust activity in the LNG market, with a 140% year-over-year increase in the LNG pipeline [29] Question: Details on digitization efforts and their impact - Management highlighted that digitization differentiates the company from competitors and enhances customer engagement, leading to recurring revenues [30][31] Question: Dynamics of gross margin in relation to large projects - Management acknowledged that large projects typically have lower margins but noted that increased volumes and productivity gains helped maintain solid margins [34][35] Question: Timing for other large projects to move to execution - Management confirmed that a broader range of projects across various sectors is moving to execution, not just LNG [38] Question: Impact of data center and medium voltage heater opportunities on results - Management stated that there was no impact in the second quarter, but they are beginning to book orders and see high-probability opportunities [39] Question: Balance between organic and inorganic growth investments - Management emphasized a priority on organic growth initiatives while also tracking potential inorganic opportunities [45]

Core Insights - Thermon reported strong third-quarter 2025 results, with revenue growth of 14.9% year-on-year to $131.7 million and adjusted earnings per share of $0.55, exceeding Wall Street forecasts by 51.7% [1] - Following the positive results, Thermon raised its full-year guidance, projecting revenue at a midpoint of $516.5 million and adjusted earnings per share at a midpoint of $2.08 [1] - The stock price of Thermon increased by 10.6% in response to the earnings report, indicating strong investor optimism and healthy demand for the company's products [1][3] Financial Performance - Revenue for the third quarter reached $131.7 million, reflecting a year-on-year increase of 14.9% [1] - Adjusted earnings per share were reported at $0.55, which is 51.7% higher than analyst expectations [1] - The company has set a new revenue guidance for the full year at a midpoint of $516.5 million and adjusted earnings per share at a midpoint of $2.08 [1] Market Reaction - Thermon's shares experienced a significant increase of 10.6% in the morning session following the earnings announcement, highlighting a strong market reaction [1][3] - The stock has shown low volatility, with only 7 moves greater than 5% over the past year, indicating that this news had a substantial impact on market perception [3] - Year-to-date, Thermon shares have risen by 14.5%, reaching a new 52-week high of $32.63 [5]

Financial Performance - Revenue increased by 7.7% to $115.1 million, driven by Vapor Power and OPEX growth[11] - Organic revenue declined by 5% despite a 34% decline in large project revenue[10] - Adjusted EBITDA increased by 5% year-over-year to $23.2 million[11] - Adjusted EPS decreased by 5% to $0.38[11] - Free Cash Flow was $8.8 million, a significant increase of 663.2% year-over-year[11] Strategic Initiatives and Diversification - The company achieved its 70% diversification target ahead of plan[10] - OPEX sales increased by 22% year-over-year, or 4% organically[13] - Revenue from diversified end markets increased by 16%, while revenue from Oil & Gas decreased by 7%[29] Balance Sheet and Cash Flow - Net debt to Adjusted EBITDA leverage was 1.1x[11] - Cash and cash equivalents increased by 47.9% to $49.1 million[30] - Total debt increased by 49% to $169.1 million[30] Fiscal Year 2025 Guidance - The company projects revenue between $527 million and $553 million, representing 7%-12% growth[33] - Adjusted EPS is projected to be between $1.90 and $2.06[33] - Adjusted EBITDA is expected to be between $112 million and $120 million, representing 8%-15% growth[33]

Core Insights - Thermon Group (THR) reported quarterly earnings of $0.55 per share, exceeding the Zacks Consensus Estimate of $0.36 per share, and up from $0.38 per share a year ago, representing an earnings surprise of +52.78% [1] - The company achieved revenues of $131.72 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 9.82% and increasing from $114.65 million year-over-year [2] - Thermon Group has outperformed consensus EPS estimates three times over the last four quarters and has topped consensus revenue estimates two times in the same period [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.58 on revenues of $138.54 million, and for the current fiscal year, it is $1.85 on revenues of $507.25 million [7] - The estimate revisions trend for Thermon Group was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Instruments - Control industry, to which Thermon Group belongs, is currently ranked in the top 24% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Revenue for Q2 2026 was $131.7 million, representing a year-over-year increase of 14.9%[3] - Adjusted EBITDA for the quarter was $30.6 million, up 28.6% from the previous year, with an Adjusted EBITDA margin of 23.2%[8] - Net income increased by 57.9% to $15.0 million, translating to $0.45 earnings per diluted share (EPS)[3] - Sales for the three months ended September 30, 2025, were $131.723 million, an increase of 14.9% compared to $114.648 million for the same period in 2024[27] - Net income for the three months ended September 30, 2025, was $14.954 million, compared to $9.494 million for the same period in 2024, representing a 57.8% increase[27] - Basic income per share for the three months ended September 30, 2025, was $0.45, up from $0.28 in the same period of 2024, indicating a significant improvement in earnings per share[27] - Net income for the six months ended September 30, 2025, was $23,535,000, an increase of 30.8% compared to $18,005,000 for the same period in 2024[31] - Adjusted EBITDA for the six months ended September 30, 2025, was $51,848,000, representing a 10.5% increase from $46,967,000 in 2024, with an adjusted EBITDA margin of 21.5%[33] - Total sales for the six months ended September 30, 2025, reached $240,621,000, up 4.0% from $229,774,000 in 2024[42] Guidance and Future Outlook - The company raised its full-year 2026 revenue guidance to approximately $506 to $527 million, with Adjusted EBITDA expected to be between $112 to $119 million[13] - The company expects revenues to increase and believes its cash flows will be sufficient to meet its needs for the next year[22] Cash Flow and Financial Position - Free Cash Flow for the quarter was $4.4 million, down from $6.7 million in the same period last year[11] - Free cash flow for the six months ended September 30, 2025, was $12,682,000, compared to $15,436,000 in 2024, reflecting a decrease of 17.9%[40] - Cash provided by operating activities for the six months ended September 30, 2025, was $18,167,000, down 14.4% from $21,221,000 in 2024[39] - The company reported a cash and cash equivalents balance of $29.748 million as of September 30, 2025, down from $39.537 million as of March 31, 2025[29] - The company’s cash, cash equivalents, and restricted cash at the end of the period were $35,483,000, down from $52,698,000 at the end of the same period in 2024[31] Orders and Backlog - Backlog as of September 30, 2025, was $251.3 million, a 16.9% increase from the previous year[9] - New orders for the quarter totaled $131.0 million, resulting in a book-to-bill ratio of 1.0x[3] - The total bid pipeline increased by 11% at quarter-end, with nearly 80% of opportunities coming from diversified end markets[2] Shareholder Actions - The company repurchased $6 million of shares during the quarter, with total repurchases since the start of the program reaching $36 million[11] Operational Costs - The company reported a stock compensation expense of $3,365,000 for the six months ended September 30, 2025, compared to $2,576,000 in 2024, indicating a 30.7% increase[33] - The company incurred $1,142,000 in ERP implementation-related costs for the six months ended September 30, 2025[37] Asset and Liability Management - Total current assets as of September 30, 2025, were $288.853 million, an increase from $274.292 million as of March 31, 2025[29] - Total liabilities as of September 30, 2025, were $262.954 million, slightly up from $260.137 million as of March 31, 2025[29] Strategic Initiatives - The company plans to pursue strategic acquisitions and emerging growth opportunities across diverse regions and industry sectors[22] - The company is focused on integrating acquired companies and achieving synergies from acquisitions[22]

Core Insights - Thermon Group Holdings, Inc. reported strong financial results for Q2 2026, with revenue and profitability exceeding expectations [1] Financial Performance - Revenue reached $131.7 million, representing a 14.9% increase compared to the prior year [1] - Gross profit was $61.1 million, up 20.0%, resulting in a gross margin of 46.4% [1] - Net income increased by 57.9% to $15.0 million, equating to $0.45 earnings per diluted share [1] - Adjusted net income (non-GAAP) was $18.3 million, a 43.0% increase, with an adjusted EPS (non-GAAP) of $0.55 [1] - Adjusted EBITDA (non-GAAP) stood at $30.6 million, reflecting a 28.6% growth, with an adjusted EBITDA margin (non-GAAP) of 23.2% [1] Orders and Guidance - New orders totaled $131.0 million, showing a slight decrease of 0.1% [1] - The book-to-bill ratio was reported at 1.0x [1] - The net leverage ratio was maintained at 1.0x [1] - The company raised its full-year financial guidance for 2026 [1] Management Commentary - The President and CEO of Thermon highlighted the exceptional performance in the second quarter, noting that revenue and profitability exceeded expectations across the board [1]