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Building wealth lies in buying and holding well-run businesses with competitive moats and long-term growth prospects. I believe GE Vernova (NYSE: GEV) has that all in spades. Since it was spun off from General Electric in 2024, GE Vernova has proven itself to be one of the best ways to invest in the global electricity race.
That artificial intelligence boom is unlikely to slow for years to come, which means GE Vernova is well-positioned to succeed well into the next decade. While the stock has recently pulled back from all-time highs, this presents an attractive time to buy for long-term investors.
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In GE Vernova's second quarter, orders grew 88% to more than $24 billion. Revenue jumped 22% to $11.1 billion. The company's free cash flow in the second quarter exceeded the entire prior year's amount, at $5.1 billion.
The good news led the company's management to raise its revenue guidance for the entire year. GE Vernova now anticipates revenue of $45.5 billion to $46.5 billion. Better yet, the free cash flow estimate exploded to $11.5-$12.5 billion, nearly double its previous level.
The electricity race is going to last for several more years, and you can see that just in GE Vernova's backlog. The business pipeline is long at $176 billion and will likely exceed $200 billion by early 2027. The Power and Electrification divisions are leading the charge with substantial current and projected future growth, while the company's struggling Wind division is becoming less consequential.
Of course, all this good news means the stock comes at a hefty price. Currently trading at about 39 times forward earnings, this stock has very few industrial peers with as much multi-year revenue visibility and as enormous a backlog. Today's premium could look quite inexpensive to a long-term investor.
Yes, GE Vernova is ramping up spending and still dealing with a losing Wind segment. Still, the bigger picture is very promising, and I do believe that GE Vernova is among the stocks that could help an investor build generational wealth.
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends GE Vernova. The Motley Fool has a disclosure policy.
Could GE Vernova Be Your Ticket to Generational Wealth? was originally published by The Motley Fool
