FA Alpha Weekly Digest 01 27 2025

Wall Street’s stock picks can’t be trusted and the advertising bias of the mainstream financial media makes their news only sensationalist-driven. Gain an edge by knowing the trends that matter and some of the mispriced stocks in the market.

We bring you the FA Alpha Weekly Digest, a roundup of FA Alpha’s unique and unparalleled equity, credit, and macroeconomic insights over the past week.

In today’s digest, we’ll cover recent trends in IES Holdings (IESC), Constellation Energy (CEG), D-Wave Quantum (QBTS), and SAP SE (SAP).

This company delivers power to where it’s needed

The U.S. power demand has reached new highs, driven by AI, data centers, and commercial expansion, with further growth expected in the coming years. To capitalize on this trend, IES Holdings (IESC) has strategically expanded its services across residential, commercial, industrial, and infrastructure sectors. The company’s diversified business model and strong growth have resulted in impressive financial performance. Despite these achievements, the market is underestimating IES’s potential, pricing in a decline in profitability that may not reflect its true growth trajectory. With increasing investments in power infrastructure, IES is well-positioned for continued success, presenting a compelling opportunity for investors.

This company's acquisition is positioning it as a leading energy provider, though the upside might already be priced in?

Donald Trump’s return to the presidency is expected to bring a major shift in U.S. energy policy, with a renewed focus on fossil fuels and deregulation. His administration aims to boost domestic oil and gas production while scaling back renewable energy initiatives. To meet growing demand in natural gas and renewable energy, Constellation has significantly expanded its portfolio and announced a $27 billion acquisition of Calpine. While the acquisition strengthens Constellation’s market position and offers operational benefits, the company’s stock has already surged 30% this year, reflecting high market expectations. Investors should be cautious, as the stock’s elevated valuation suggests much of the anticipated growth may already be priced in.

Don't invest in quantum if you don't have the stomach for volatility

Quantum computing holds immense potential but is still in the early stages with many challenges. Nvidia CEO Jensen Huang predicts it will take 15 to 30 years to become practical, dampening investor enthusiasm. D-Wave Quantum focuses on quantum fortifying optimization problems but remains unprofitable as it invests in R&D. The industry’s future is promising, but achieving widespread adoption and profitability will take time.

This ERP giant is helping businesses implement AI

The rapid advancements in AI showcased at CES highlight a critical challenge for businesses, which is to effectively integrate AI into existing systems to deliver tangible ROI. SAP SE (SAP) addresses this need by embedding AI into its cloud-based ERP solutions, such as S/4HANA, which optimize operations across finance, HR, and supply chain management. With tools like Joule automating tasks and enhancing efficiency, SAP is driving cloud ERP adoption, with its cloud revenue expected to accelerate significantly by 2027.? Despite challenges from legacy systems and competitors like Microsoft and Oracle, SAP’s tailored industry solutions give it a competitive edge. Its strategic focus on practical AI integration positions it as a quiet but influential leader in enterprise AI innovation.

We hope you find this week’s FA Alpha Daily articles insightful.

See you next week as we talk about another set of interesting names.

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