Nextpower Stock May Still Have Room to Run
We think Nextpower (NXT) stock might be a good investment candidate. Why? Because you get strong margin, low-debt capital structure, and strong momentum – with room to run as the stock is meaningfully below its 52-week high.
There Are Several Things In Favor Of NXT Stock
NXT is up 145% so far this year, but can still run more given its good fundamentals and the fact that it is 20% below its 52-week high. Nextpower’s recent rebranding reflects its evolution into an integrated energy solutions provider, delivering advanced power conversion systems and robotics to meet surging global electricity demand. This expanded offering and strong customer uptake drive healthy operating margins and a record backlog exceeding $5 billion. The company maintains a debt-free balance sheet with $845 million in cash as of September 2025. Despite a recent 6.2% dip, the stock has surged 129.2% year-to-date, underpinned by positive analyst guidance.
And Its Fundamentals Look Good
- Long-Term Profitability: About 16.7% operating cash flow margin and 19.9% operating margin last 3-year average.
- Strong Momentum: Currently in the top 10th percentile of stocks in terms of “trend strength” – our proprietary momentum metric.
- Revenue Growth: Nextpower saw revenue growth of 20.4% LTM and 27.1% last 3-year average, but this is not a growth story
- Room To Run: Despite its momentum, NXT stock is trading 20% below its 52-week high.
Below is a quick comparison of NXT fundamentals with S&P medians.
| NXT | S&P Median | |
|---|---|---|
| Sector | Industrials | – |
| Industry | Electrical Components & Equipment | – |
| PS Ratio | 3.9 | 3.1 |
| PE Ratio | 23.0 | 22.8 |
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| LTM* Revenue Growth | 20.4% | 6.1% |
| 3Y Average Annual Revenue Growth | 27.1% | 5.4% |
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| LTM* Operating Margin | 21.1% | 18.8% |
| 3Y Average Operating Margin | 19.9% | 18.2% |
| LTM* Op Cash Flow Margin | 19.3% | 20.5% |
| 3Y Average Op Cash Flow Margin | 16.7% | 20.1% |
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| DE Ratio | 0.0% | 21.4% |
*LTM: Last Twelve Months
But Be Wary Of The Risks
While NXT stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. NXT took a hit of 68% in the Dot-Com crash, slid 64% during the 2008 meltdown, and dropped 58% in the 2022 inflation squeeze. Even the milder sell-offs, like 2018 and the Covid crash, dragged it down more than 25%. Solid fundamentals matter, but when the market shakes, this stock isn’t immune to sharp declines.
NXT Is Just One of Several Such Stocks
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We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- High operating or (cash flow from operations) margins
- No instance of very large revenue decline in the past 5 years
- Low-debt capital structure
- Strong momentum
A portfolio that was built starting 12/31/2016 with stocks that fulfil the criteria above would have performed as follows:
- Average 12-month forward returns of nearly 15%
- 12-month win rate (percentage of picks returning positive) of about 60%
Portfolios Win When Stock Picks Fall Short
Stocks soar and sink – the key is staying invested. A balanced portfolio keeps you in the market, boosts gains and reduces single stock risk
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.