Key Points

• Nvidia's partnership is a big deal for this semiconductor stock.

• Most of the anecdotal evidence, management commentary, and order patterns currently confirm the AI/data center market is all systems go.

Shares in gallium nitride (GaN) and silicon carbide (SiC) semiconductor company Navitas Semiconductor (NASDAQ: NVTS) soared by 28.4% in June, according to data from S&P Global Market Intelligence. The stock has been on a remarkable run recently, and at the time of writing, it's up more than 80% year to date.

Why Navitas Semiconductor is surging

There's no doubt as to the reason for the move. It comes down to the company's relationship with Nvidia, specifically its potential role in developing data center architecture for the next generation of data centers, which are set to hit the market in 2027.

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As previously discussed, the new data centers are likely to be more efficient, require significantly lower maintenance and cooling costs, and offer better reliability. The key to the new 800-volt high-voltage direct (HVDC) current data centers, set to begin in 2027, lies in a fundamental change in how power is distributed from the grid through the data center to the IT racks.

That's where Navitas Semiconductor's GaN and SiC power devices come in. Its GaN chips will help with converting 800-volt HVDC down to the lower voltages necessary to run graphics processing units, which are Nvidia's specialty, in the IT racks. Meanwhile, Navitas' SiC chips are crucial for converting the 13.8 kilovolt alternating current power from the grid to the 800-volt HVDC used in the new data centers.

As such, Navitas' solutions look likely to play a key role in the next generation of data centers that will power the AI revolution.

Ongoing end demand

The news of Nvidia's partnership is obviously a plus. Still, investors will also need to see that capital spending on data centers and end demand from AI applications continue to grow at a rate necessary to support a successful rollout of the new data centers in 2027. And here, Navitas investors have reason to be optimistic. Despite the uncertainties created by the trade tariff conflict, there has been no let-up in the data center spending plans of hyperscalers such as Microsoft and Alphabet.

In addition, anecdotal evidence from data center equipment companies and contractors indicates that investment in data centers continues to run hot.

Image source: Getty Images.

Where next for Navitas

As with hypergrowth stocks, conventional metrics such as trailing earnings won't make much sense right now. Still, Navitas should expect an aggressive sales ramp-up in 2026, ahead of the launch of the 800-volt HVDC data centers in 2027. As such, the ongoing momentum in the development of those sales, along with Nvidia's commentary on the progress of its architecture for the new data centers, is likely to be the key driver of the stock price for the foreseeable future.

Should you invest $1,000 in Navitas Semiconductor right now?

Before you buy stock in Navitas Semiconductor, consider this:

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

It's no secret that the market has lost interest in oil stocks over the past year. Indeed, all three stocks covered here -- namely, Devon Energy (NYSE: DVN), Diamondback Energy (NASDAQ: FANG), and Vitesse Energy (NYSE: VTS) -- have declined over the last year. As such, they now trade with excellent dividend yields or attractive price-to-free cash flow (FCF) multiples.

Moreover, I think there's a strong possibility that all three companies have recently moved to reduce risk and secure their dividends. Here's why.

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The oil price environment in the first half

Israel's attack on Iran sent the price of oil spiking higher, as investors priced in the risk of ongoing instability in a critically crucial oil-producing region. However, before going into how oil companies responded to this, it's worth putting the move into context.

Image source: Getty Images.

The spike occurred after a few months of oil trading in the low-to-mid-$60 per-barrel range. In addition, sentiment toward oil turned negative following a slower economic growth outlook (due to tariff escalations and ongoing geopolitical tensions) and OPEC's decision to increase production.

WTI Crude Oil Spot Price data by YCharts

There's little doubt that sentiment turned negative after events in the spring. For example, Vitesse implemented a 32% cut in its planned capital expenditures and deferred completion of a couple of wells "in response to current commodity price volatility to preserve returns and maintain financial flexibility." Diamondback cut its planned 2025 capital expenditures to $3.4 billion to $3.8 billion from a previous range of $3.8 billion to $4.2 billion.

While Devon didn't make any adjustments in connection with the commodity price environment, management noted, "With the ongoing market and price volatility, Devon will continue to monitor the macro environment and has significant flexibility to adjust its activity and capital programs" on its earnings release in early May.

What happened after the recent oil price spike

According to numerous reports, the attack on Iran on June 13 triggered a record amount of hedging volumes through Aegis Hedging Solutions. This company assists commodity companies with their hedging strategies. While some of it was possibly oil companies looking to get exposure to potentially higher prices, the likelihood is that it was independent oil companies taking advantage of the spike to hedge their near-term production.

Image source: Getty Images.

As we've already seen, all three companies have either cut their capital spending plans or are monitoring events with the option to do so. In addition, they all utilize hedging as an integral part of their capital allocation strategy, ensuring returns to investors through dividends and share buybacks.

Hedging strategies and dividends

While we won't know for sure until they release their second-quarter earnings, all three are strong candidates to have taken part in the rush to hedge their oil production.

Hedging is an integral part of Vitesse's strategy, which enables it to maintain its $2.25-per-share dividend (current yield: 10%). As of the end of March, Vitesse had 61% of its remaining oil production hedged at an average price of $70.75 per barrel. Look for that figure to increase, or at least an increase in 2026 production volumes hedged.

Diamondback is a conservatively run oil company that uses hedging to ensure its base dividend of $4 per share (currently equivalent to a yield of 2.9%). As of May, it had downside protection in place to $55 a barrel. In other words, at any price of oil above $55, Diamondback has upside exposure to the price of oil.

The strategy is to enable cash flow to return to investors through a variable dividend or share buybacks, in addition to the base dividend. Again, look for Diamondback to have increased hedging activity in the quarter.

As of the first quarter, Devon Energy had more than 25% of its expected 2025 oil production hedged. With that hedging in place, management estimates it will generate $1.9 billion in FCF at a price of oil of $50 per barrel, $2.6 billion at $60 per barrel, and $3.3 billion at $70 per barrel. These figures easily cover its fixed dividend of $0.96 per share (about $650 million in cash). With increased hedging in place, the fixed dividend (currently yielding almost 3%) will be even more secure.

Image source: Getty Images.

Stocks to buy for investors looking for passive income

In particular, Diamondback's and Devon's dividends look very secure, and both have the potential to increase their discretionary dividends, make more share buybacks, or pay down debt. If I'm right, and they, and Vitesse, took advantage of the oil price spike, then passive income investors can sleep even sounder in the knowledge that their dividend income is safe.

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Shares in auto parts retailer Advance Auto Parts (NYSE: AAP) were lower by more than 8% as of 11 a.m. today. The move came after Goldman Sachs downgraded the stock from neutral to a sell, amid concerns that it was losing market share to competitors. In addition, the Goldman Sachs analyst believes the current valuation relies on a margin recovery, which might not occur in the current environment.

Slow going for Advance Auto Parts

It's hard enough for a Wall Street analyst to refrain from issuing a buy recommendation, so when a heavyweight like Goldman Sachs issues a sell rating, it has a significant impact.

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The analyst's channel checks suggest that Advance Auto may be losing market share and experiencing margin pressure, a more significant concern than the company's current valuation. After all, if management can turn around the company's lackluster performance, then the earnings recovery can be dramatic.

Still, this is a company that's been in turnaround mode for over a decade, so a certain amount of skepticism is warranted. It's also a complicated trading environment. While management completed its store optimization program in March, it's still closing distribution centers, with a target to close 12 this year and end the year with 16, followed by the closure of another four next year.

Given the importance of logistics and ensuring in-store parts availability in this industry, it wouldn't be surprising if the company encounters some headwinds.

Image source: Getty Images.

Where next for Advance Auto Parts?

The only way the company can silence the doubters is by delivering on its guidance in 2025. If you believe the company is finally in turnaround mode, then today is a buying opportunity. However, cautious investors will look for at least a few quarters of evidence before drawing any conclusions worth acting on.

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Warren Buffett is not known for buying the most exciting businesses out there, but he is known for making some of the best investments. It's a thought to bear in mind when considering investing in Pool Corp. (NASDAQ: POOL), one of Berkshire Hathaway's holdings.

Here's why.

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Why Pool Corp. is a great Buffett stock to buy

The case for buying Pool Corp. is simple. The company holds a dominant market share in a highly fragmented yet growing market. Remember that, even if new pool construction growth is slowing, the installed base of pools is still growing, creating opportunities for Pool Corp.

Image source: Getty Images.

In fact, almost two-thirds of its sales come through the maintenance and repair of existing swimming pools, with items such as chemicals, equipment, parts, and supplies used to maintain pumps, heaters, and filters.

These factors come together to create a business with relatively high profit margins (for a distributor) and consistently high return on invested capital (ROIC). It implies that every new sales center it invests in, or smaller distributor it acquires to build scale, tends to generate a good return.

Data by YCharts.

A long-term growth prospect

Observant readers will note that Pool's margins and ROIC declined in 2022, but this is due to a natural correction from the artificial boom in stay-at-home spending created by the pandemic lockdowns. About 15% of its sales in 2024 came from new swimming pool construction, and the slowdown in this area has impacted Pool Corp.'s sales growth.

Still, as noted above, the installed base is growing, and so should Pool Corp.'s revenue from maintenance and repair. As such, when the new pool construction market inevitably bottoms, Pool Corp. should get back on its long-term growth path.

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Warren Buffett has made some critical comments on the airline industry over the last few decades, and frankly, he has a point. But are his criticisms still valid, or have carriers like Delta Air Lines (NYSE: DAL) and United Airlines (NASDAQ: UAL) altered the way investors should view the industry?

Buffett's views on the airline industry

The airline industry has historically struggled to generate the returns to cover its cost of capital. This is a point recognized by the International Air Transport Association and by Buffett himself. The legendary investor has argued that airlines' high fixed costs and the low marginal cost of adding extra seating and capacity lead to a tendency to ramp up capacity while also selling tickets at a low price.

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Image source: Getty Images.

It's essential to note that when Buffett and others speak disparagingly about the airline industry and the returns it has generated for investors, they are typically referring to equity investors in airlines.

In contrast, bond investors have tended to do well, and airlines appear to have little difficulty attracting capital to the industry, not least because bonds are commonly securitized against valuable assets, namely the planes. It's also been an excellent industry for suppliers of airline equipment.

In Berkshire Hathaway's annual letter in 2007, Buffett wrote: "The airline industry's demand for capital ever since that first flight has been insatiable. Investors have poured money into a bottomless pit, attracted by growth when they should have been repelled by it."

In 1990, he called out the self-destructive pricing tactics of certain carriers. And in 1992's letter, he talked about airlines acting like members of a competitive tontine -- an arrangement whereby the participants contribute equally to a prize that goes to the lone survivor -- that they wish to conclude "as rapidly as possible."

The general theme of a capital-intensive industry, with relatively small and ever-at-risk profit margins, containing participants who don't always act rationally, would go a long way to explaining why airlines have struggled to cover their cost of capital.

Image source: Getty Images.

The airline industry has changed

That said, there's a strong case for arguing that the airline industry is different now. As mentioned previously, Delta and United Airlines are both consistently generating a return on invested capital (ROIC) that exceeds their weighted average cost of capital (WACC), a key requirement for generating value for shareholders.

They are doing so because of a combination of their business models, a change of behavior, and certain structural factors within the industry that are creating a favorable long-term environment for network carriers like Delta and United.

As for their business models, both continue to grow premium travel revenue, and it's proving more resilient in a slowdown. For example, the tariff-induced slowdown this year hasn't led to any deterioration in high-end consumers' willingness to purchase a premium experience, according to United's chief commercial officer, Andrew Nocella, on the last earnings call.

It was a similar story from Delta's president, Glen Hauenstein, who said, "We have not seen any cracks yet in the Premium."

And their loyalty programs -- Delta's SkyMiles and United's MileagePlus -- not only foster loyalty and customer recognition, leading to repeat bookings, but they also generate a wealth of valuable data on consumer behavior and produce lucrative revenue through the sale of miles.

Behavior and structural advantages

As Buffett's quotes above suggest, the industry hasn't always acted rationally, but there is recent evidence that it has begun to do so. For example, when overcapacity manifested itself in the spring of last year, airline stocks sold off heavily, only to recover strongly after carriers reduced unnecessary capacity.

DAL data by YCharts.

Fast forward to today, and both Delta and United have announced cutbacks on capacity expansion plans in light of slowing bookings -- a sign of rational behavior.

Lastly, on the structural advantages, a combination of rising airport costs (partly due to the need for infrastructure investment), labor costs, supply chain costs, and parts shortages is putting significant pressure on the margins of low-cost carriers. That's creating an opportunity for network carriers to offer economy tickets to fill capacity.

Are they stocks to buy?

The airline industry has undergone significant changes, and while Buffett's words should always be heeded, the reality is that Delta and United are generating good and sustainable ROIC by diversifying their revenue streams to ensure long-term, sustainable growth. Both stocks are attractive for long-term investors.

Should you invest $1,000 in Delta Air Lines right now?

Before you buy stock in Delta Air Lines, consider this:

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Shares in aerospace giant Airbus (OTC: EADSY) rose by as much as 3.1% in early trading as the Paris Air Show concluded for industry professionals (it remains open to the public until Sunday). Airbus had a lot to say and $21 billion in orders to announce , but unfortunately, its great rival, Boeing (NYSE: BA), had very little to say.

Airbus and Boeing at the Paris Air Show

While Boeing didn't release an official statement on the matter, it's widely reported that Boeing scaled down its participation and elected not to announce new orders following a recent Air India crash involving a Boeing 787 Dreamliner. Boeing had previously announced it would offer full support for the investigation currently taking place.

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Consequently, Airbus took center stage in the commercial aerospace industry, announcing $14.2 billion in firm orders and a further $6.7 billion under memoranda of understanding (MoUs).

Among the 148 firm orders was the first-ever order from LOT Polish Airlines for 40 A220 aircraft. All Nippon Airways, a subsidiary, ordered 27 A321 airplanes. Riyadh Air of Saudi Arabia ordered 25 A350 wide-bodies and will be the first Saudi airline to fly the 350. Vietnam's VietJet signed an MoU for 100 Airbus A321neo aircraft.

Image source: Getty Images.

Where next for Airbus?

The strength in A350 (which competes with the Boeing 787) and A321 orders (a highly successful plane Boeing is struggling to compete with) is a continuation of an order trend this year. Meanwhile, the 40 A220 orders are a shot in the arm for an aircraft that Airbus has found it difficult to sign deals on in the last year or so.

Overall, it was a positive air show for Airbus, and that's reflected in the stock price today.

Should you invest $1,000 in Airbus SE right now?

Before you buy stock in Airbus SE, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Airbus SE wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*

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Very few companies demonstrate the complexity of the current trade conflict and the strategic necessity of securing rare earth materials for the U.S. more effectively than MP Materials (NYSE: MP), and its share price action this week, up 21.8% at the time of writing, underscores this point.

A complicated trading position

Management describes the company as being "America's rare earth magnetics champion," as it is "America's only fully integrated rare earth producer." However, as fellow Fool.com writer Rich Smith notes, Shenghe Resources (a majority-owned subsidiary of China's Shenghe Resources Holding Company) was a major customer of MP Materials, and the company that MP Materials "sells the vast majority of its rare earth concentrate" to, according to its SEC filings.

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Moreover, in mid-April, MP Materials said it had "ceased shipments of rare earth concentrate to China" due to China's tariffs and the issue of selling critical materials not being "aligned with America's national interest." As such, the trade conflict is a near-term negative for MP Materials.

The long-term picture

That said, and as management consistently argues, the company's real growth opportunity lies in being part of the U.S. developing its own rare earth supply chain. It's a point reiterated by CEO James Litinsky on a recent earnings call: "What is now abundantly clear is that the United States must urgently accelerate its full-scale domestic rare earth magnetic supply chain."

Image source: Getty Images.

As such, when speculation rises that the administration is working to secure funding for the company, the stock is likely to perform well, as it did this week.

It's an interesting situation, but with so much uncertainty surrounding the company's direction, it's challenging to argue that retail investors have any kind of advantage in investing in the stock.

Should you invest $1,000 in MP Materials right now?

Before you buy stock in MP Materials, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and MP Materials wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*

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Shares in Verve Therapeutics (NASDAQ: VERV) soared 80.5% this week on the news of an agreement for Eli Lilly (NYSE: LLY) to acquire Verve. The deal centers on an exciting cardiovascular health medicine program, VERVE-102.

What is VERVE-102?

It's easy to see why Lilly is excited about the program. VERVE-102 targets the PCSK9 gene, aiming to deactivate it in the liver, and achieves this with a single infusion. Given that PCSK9 binds to low-density lipoprotein (LDL) (often called "bad" cholesterol) receptors and prevents them from recycling to the cell surface, it follows that inhibiting PCSK9 will improve the body's ability to remove bad cholesterol.

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The initial results from the phase 1b trial give cause for optimism. According to Verve's press release:

• "VERVE-102 was well-tolerated, with no treatment-related serious adverse events (SAEs) and no clinically significant laboratory abnormalities observed" across 14 patients given three different dose levels.
• Dose dependency was established, with the lowest dose (0.3mg/kg) patients achieving a "mean reduction in blood LDL-C of 21%," rising to 41% at the 0.45mg/kg dose, and 53% at the 0.6mg/kg dose.

Image source: Getty Images.

Terms of the Lilly/Verve agreement

Lilly is offering:

• $10.50 per share for all the outstanding shares
• Plus a nontradable contingent value right (CVR) that pays up to $3 per share upon "the first patient being dosed with VERVE-102 for ASCVD in a U.S. phase 3 clinical trial on or prior to the tenth anniversary of closing or termination of the CVR."

The share price is $11.12 as I write, implying that the market is willing to pay $0.62 for the CVR, suggesting a 21% chance that Lily will take VERVE-102 to a stage 3 trial -- a reasonable assumption for a novel medicine under a major pharmaceutical company.

Should you invest $1,000 in Verve Therapeutics right now?

Before you buy stock in Verve Therapeutics, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*

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Shares in nuclear power company Oklo (NYSE: OKLO) rose by a whopping 28% in the week to Friday morning. The move comes in a busy week for the company, whereby events helped encapsulate the investment case for the stock.

What does Oklo do

The company is developing what it describes as "next-generation fast fission power plants," known as Aurora. Its Aurora powerhouse has a few interesting qualities. First, it's based on a fast fission plant (Experimental Breeder Reactor-II) that the U.S. government operated from 1964 to 1994, so the technology is proven. Second, it's designed to operate either connected to the grid or independently of it -- the latter is a significant advantage when reliable power is needed in remote locations. Third, it can run on fresh or recycled nuclear fuel.

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What happened this week

The big news this week came with the announcement, on Wednesday, of a notice of intent to award (NOITA) Oklo a project to provide power to the Eielson Air Force Base in Alaska -- an attractive prospect for the Department of Defense because Aurora can provide power without being connected to the grid. Oklo will provide power under a long-term power purchase agreement (PPA).

One day later, Oklo announced the pricing of a public offering intended to raise $400 million to $460 million.

Image source: Getty Images.

Oklo's business model is to build, own, and operate its Aurora powerhouse and sell energy via power purchase agreements (PPAs), rather than selling its powerhouse designs. The upside is that it generates long-term recurring revenue; the downside is that it will require significant capital to build the powerhouses, hence the stock offering, and there is the usual risk of cost overruns in building and operating power plants. Still, the market took a positive view on matters this week.

Should you invest $1,000 in Oklo right now?

Before you buy stock in Oklo, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $655,255!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $888,780!*

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Shares in uranium fuel and nuclear energy services company Cameco (NYSE: CCJ) were up 11.7% by 11 a.m. ET today. The move comes as the market digests the news that Westinghouse Electric's adjusted earnings before interest, taxation, depreciation, and amortization (EBITDA) will be higher than previously expected in 2025.

That matters to Cameco investors because their company owns 49% of Westinghouse, with the rest owned by Brookfield Renewable Partners (NYSE: BEP), which also rose sharply today. Cameco expects its share of the increase in adjusted EBITDA expectations to be $170 million. "This expected increase will be taken into consideration in determining the 2025 distribution payable by Westinghouse to Cameco," according to the press release.

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The increase is related to two nuclear reactors at a power plant in Central Europe. The good news doesn't stop there, because Cameco expects Westinghouse to also benefit from providing fuel services to the plant.

A brighter outlook

The $170 million figure is notable for a company that reported approximately $1.1 billion in adjusted EBITDA for 2024.

Image source: Getty Images.

It's also important because it further confirms the improving momentum behind investment in nuclear energy as a solution to the challenge of obtaining a reliable source of energy while meeting net-zero emissions targets. As Cameco notes, Westinghouse's expected EBITDA growth over the next five years is 6%-10%. Meanwhile, Cameco's core uranium fuel and nuclear power products and services businesses are set to grow sales at a similar rate.

All of this adds up to an exciting growth outlook for an industry that was written off far too easily in the past.

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Boeing (NYSE: BA) received some positive commentary over a critical issue for its future. At a recent International Air Transport Association (IATA) summit, the president of Emirates airline, Tim Clark, made positive comments on the new widebody 777X, which should reassure investors that Boeing is on the right track under CEO Kelly Ortberg. Here's why.

Emirates airline is a big deal

According to a Reuters article, Clark stated that Emirates had been informed it would receive its first 777X in the second half of 2026 or the first quarter of 2027. In addition, he declared himself "cautiously optimistic" over the turnaround at Boeing and noted progress at the aerospace giant.

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These are just comments. However, they matter, and particularly so when they come from the head of one of the largest international airlines in the world, Emirates. In addition, while Lufthansa is set to receive the first 777X in 2026, Emirates is, by some distance, the largest customer for the 777X at present. The airline has 205 unfilled orders for the 777X, followed by 97 unfilled orders from Qatar Airways, with Singapore Airlines a distant third with 31.

The 777X is also pivotal to Boeing's future. The new widebody is larger and has a more extended range than Boeing's 787 Dreamliner and will service the high-demand long-haul international travel market. Generally, Airbus is considered the leader in the narrowbody market, while Boeing holds the lead in the widebody market. That said, Airbus has surpassed Boeing in the widebody market in recent years, partly due to quality control issues with the 787 and ongoing, costly delays on the Boeing 777X.

Image source: Getty Images.

Why the 777X matters to investors

Simply put, Boeing needs to keep the 777X on track, not least because airlines are likely to be more hesitant in placing orders when they see continued delivery delays. Furthermore, the delays are extremely costly, in terms of charges, and tying up capital in inventory that won't be utilized until deliveries take place.

The 777X was initially intended to have its first delivery in 2020, and the subsequent delays to that timeline have proved embarrassing and costly for Boeing. In its fourth-quarter 2020 earnings report, Boeing recorded a $6.5 billion pre-tax charge on the program and informed investors that the first 777X delivery would occur in late 2023.

Last October, Boeing announced a $2.6 billion charge, followed by a further $900 million charge in January.

These charges total at least $10 billion. Furthermore, Boeing has inventory tied up in the program, and it's incurring increased research and development costs, with an increase of $525 million in 2023 and $435 million in 2024.

Stemming the flow of these charges and losses would be a significant plus; that's why keeping to the revised 2026 target for first delivery is so important.

It also counts because it discourages airlines from canceling orders and encourages them to place new orders. Suppose Boeing can demonstrate that it can deliver the first 777X in 2026 and effectively ramp up production thereafter. In that case, airlines can begin to build capacity assumptions based on having 777Xs in service at a given time.

Image source: Getty Images.

What's next for Boeing?

As previously discussed, the three key things investors need to see from Boeing are a satisfactory ramp-up in production on the 737 MAX (to an initial 38 a month), a return to profitability for Boeing Defense, Space & Security (BDS), and keeping the 777X on track.

With Boeing making tangible progress on the 737 MAX (management expects to reach a 38-month rate soon), and BDS returning to profitability in the first quarter, the positive commentary on the 777X suggests Ortberg is achieving Boeing's three biggest aims in 2025.

That's something likely to support the stock price as it moves through the year.

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For many investors, buying Tesla (NASDAQ: TSLA) has already set them up for life, but will that be true for anyone newly buying into the stock now? Here's a look at what you need to know before buying the stock.

Understanding the investment thesis for Tesla stock

Tesla is an unusual stock, known to most investors primarily as the leading electric vehicle (EV) company, but that isn't the primary value driver of the stock. Indeed, if you look at Tesla solely as a car company, you would likely avoid the stock. Let's put it this way: Tesla currently trades at a price-to-earnings multiple of 192, compared to single-digit multiples at car companies like Ford Motor Company and General Motors.

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The valuation discrepancy doesn't stem from Tesla's superior profit margins or its leading position in the electric vehicle market. Instead, it comes down to Tesla being able to do something that rival car companies haven't yet done or have abandoned trying to do: launch a robotaxi service. General Motors has already abandoned robotaxi development, and Ford (which had planned to have a robotaxi service in place by 2021) ended its investment (alongside Volkswagen) in robotaxi company Argo AI in 2022. Volkswagen plans to launch its robotaxi service in 2026.

So, if Tesla's valuation isn't justified in terms of being a highly successful electric vehicle company, then how should it be viewed?

The following key points apply, and they make Tesla a highly attractive stock for the speculative end of your portfolio:

• The value in Tesla lies in its robotaxi business; this is not purely a car company stock, or even an electric vehicle stock, and its valuation reflects that.
• The reliance on robotaxi/full self-driving (FSD) makes it a speculative growth stock.
• Tesla's installed base of vehicles gives it significant advantages over Waymo and others.
• Tesla is not your average speculative growth stock; it holds significant advantages over typical growth stocks.

Image source: Getty Images.

Why robotaxis matter and why Tesla isn't your average growth stock

The robotaxi concept and the FSD that powers it are potentially a huge earnings driver for Tesla. One of Tesla's most vocal and visible supporters, Cathie Wood's Ark Invest, which expected a valuation of $2,600 per share for Tesla in 2029, relies on a model that prescribes 88% of the company's value from robotaxis, compared to just 9% from EVs.

The opportunity to earn recurring revenue from selling unsupervised FSD subscriptions to Tesla owners wanting to use their vehicles as robotaxis is massive, as is the potential to generate recurring revenue on a ride-per-mile basis from robotaxis. Moreover, Tesla plans to mass-produce its dedicated robotaxi vehicle, Cybercab, next year.

A speculative growth stock

That said, the robotaxi launch hasn't even taken place yet (it's scheduled for June 12 in Austin), and it will only be on a small scale initially. As such, Tesla is a speculative growth stock, an observation that suggests Tesla stock should be filed on a long list of highly speculative investments to consider on a rainy day.

Image source: Getty Images.

Why Tesla deserves a place in a balanced portfolio

However, there are differences -- in fact, many differences -- between Tesla and typical growth stocks. First, speculative growth stocks are usually not established leaders in the core business that underpins their growth. The Model Y is not only the best-selling electric vehicle (EV) in the world, but it's also the best-selling car in the world. In other words, Tesla already has a compelling brand and is the market leader in the growth area of the auto market.

Second, this is not a struggling small-cap stock desperately trying to establish brand recognition and promote its new technology to a sceptical marketplace. Waymo has offered a robotaxi service since 2018, and there is little doubt that consumers want to use robotaxis.

Third, Tesla isn't a growth stock struggling with its finances and seeking a larger partner to invest, which would dilute existing shareholders' claims on future cash flows. A quick look at its most recent balance sheet reveals $37 billion in cash and equivalents, alongside $7.5 billion in debt and finance leases, resulting in a net cash position of $29.5 billion.

Image source: Getty Images.

Finally, Tesla's position as a cost-effective automaker with the capacity and scale to ramp up production and the vehicles on the road means it can produce robotaxis (whether Cybercab or existing Tesla models) to support growth, and it has a vast bank of data from Tesla vehicles to use to improve its FSD capability.

All told, Tesla is speculative because its robotaxis haven't even been launched yet, there's a lot more certainty around the company than in most growth stocks. That makes it worth buying for the risk-seeking end of a portfolio.

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The interesting thing about this list is that the two buys, Apple (NASDAQ: AAPL) and Pool Corp. (NASDAQ: POOL), have markedly higher valuations than the sell, Kraft Heinz (NASDAQ: KHC). The rationale behind the investment case for the first two lies in their long-term growth prospects -- something not shared by Kraft Heinz. Here's why.

Kraft Heinz is a challenged business

The consumer staples company generates 44% of its sales from condiments, sauces, dressings, and spreads, with 18% coming from easy-to-prepare meals. None of its other food categories (snacks, desserts, hydration products, coffee, cheese, and meats) contributes more than 10% of its sales.

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Image source: Getty Images.

It's a fast-changing industry subject to changes in consumer preferences, with substantial competition from retailers with their own branded or private-label products. This increasing competition has pressured Kraft's ability to generate revenue growth or margin expansion over the last decade.

As such, the company's return on capital employed (ROCE) lags that of its peer group. ROCE measures how much profit the company generates from its debt and equity. A consistently low ROCE implies that the company can do little to improve profitability by raising equity or issuing debt.

In short, based on current trends, it's a mature low-growth company facing ROCE challenges with a management hamstrung to initiate substantive changes by paying 61% of expected earnings in dividends.

KHC Return on Capital Employed data by YCharts.

Pool Corp., maintaining swimming pools

Continuing the theme of looking at operational metrics like profit margins, revenue growth, and ROCE, a cursory look at the medium-term trends for Pool Corp., a distributor of swimming pool supplies and equipment, suggests problems similar to those of Kraft Heinz.

That said, context counts for a lot, and investors need to recall that companies like Pool Corp. enjoyed an artificial boom during the pandemic lockdown.

Image source: Getty images.

The lockdowns encouraged spending on stay-at-home activities and drove investment in new swimming pools. For example, around 96,000 new pools were built in the U.S. in 2020, jumping to about 120,000 in 2021, and then 98,000 in 2022. By 2024, that figure was down to 60,000, and management expects a similar figure this year.

But no matter the amount, every one of those new pools will help add to the installed base that the company can sell into. Considering that it generates almost two-thirds of its sales from the maintenance and minor repair of swimming pools, this creates a significant long-term growth opportunity once the natural correction from the pandemic boom is over.

POOL Operating Margin (TTM) data by YCharts; TTM = trailing 12 months.

Apple and service growth

Apple is on a growth trajectory, focusing on increasing sales of its high-margin services. Like Pool Corp., investors can think of Apple's various devices -- including iPhones, iPads, Macs, wearables, and myriad other devices -- as an installed base for it to sell services into.

It's a growth opportunity in revenue, margins, and cash flow. As you can see below, strong services growth has increased its share of overall revenue. And given services' higher margin profile (currently above 75% compared to almost 36% for products), it's pulling up Apple's overall profit margin.

Data source: Apple. Chart by author.

That increase in profitability is likely to continue improving as services growth continues at a double-digit pace. In fact, Apple now has over a billion paid subscriptions. This will generate ongoing recurring revenue, which will drop down into improved cash flow generation.

Moreover, if you are wondering, here's what Apple's ROCE looks like.

AAPL Return on Capital Employed data by YCharts

Wall Street analysts expect Apple's free cash flow (FCF) to grow from $109 billion in 2025 to $126 billion in 2026 and $139 billion in 2039, implying double-digit increases. Trading at 27 times estimated FCF in 2025, it is not a conventionally cheap stock, and many investors may want to wait for a better entry point. Still, its long-term prospects remain excellent, and it's likely to grow into its valuation in the coming years.

Stocks to buy and sell

The key point is that Pool Corp. and Apple have a pathway to growth via expansion of the installed base of swimming pools and Apple devices, while Kraft Heinz does not have such prospects. The difference shows up in their operating metrics and long-term growth prospects.

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Shares in Comfort Systems USA (NYSE: FIX) soared by 23.3% in April, according to data provided by S&P Global Market Intelligence. The move comes as the company's first-quarter earnings allayed fears that its growth was set to slow and leave its valuation exposed.

A winner under Biden

Comfort Systems is a mechanical and electrical contractor. Slightly more than three-quarters of its revenue comes from the mechanical side (heating, ventilation, air conditioning, plumbing, piping, controls, etc.) and the rest from electrical (installation and servicing of electrical systems).

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The following chart explains its booming share price (up an incredible 1,250%). As you can see below, it's been boomtown for U.S. investment in manufacturing and nonresidential construction spending, driven by a combination of a recovery from the pandemic, infrastructure spending, the CHIPS Act, and torrid growth in spending on data centers to support artificial intelligence (AI) application growth.

US Nonresidential Construction Spending data by YCharts

Comfort Systems provides comfort

The fear was that this burgeoning growth would start to slow in 2025. However, the company's first-quarter earnings, released in late April, helped dispel this notion, not least as the company reported a backlog of $6.9 billion at the end of the quarter compared to almost $6 billion at the end of 2024.

Moreover, Comfort continues to see strength in technology spending (including data centers and semiconductor fabrication plants), rising 30% compared to the same period last year -- it now comprises 37% of total revenue.

Discussing its end markets on the earnings call, CFO William George said about data center capital spending, "There is no sign of a letup in demand for electricians, pipe fitters, and plumbers to help build data centers and, frankly, lots of other things."

It's a reassuring commentary, given that there were concerns that the AI/data center investing theme may run into trouble due to a potential slowdown in spending.

Image source: Getty Images.

A winner under Trump

The company's backlog continues to grow, and Wall Street expects another year of double-digit revenue growth in 2025. Moreover, there's a long-term growth opportunity coming from the potential reshoring of manufacturing to the U.S., either via new construction or expansions to existing facilities. While Comfort is obviously not immune to a possible economic slowdown caused by trade conflict reducing capital spending on facilities, it looks like a likely winner if President Donald Trump succeeds in revitalizing the U.S. industrial base.

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Shares in medical equipment company GE HealthCare Technologies (NASDAQ: GEHC) declined by 12.9% in April, according to data provided by S&P Global Market Intelligence. The key reason for the decline comes from the "Liberation Day" tariffs announced by President Donald Trump at the start of the month.

GE HealthCare and tariffs

The tariffs and the subsequent response, notably from China, have a significant impact on a company that's a large exporter to the country and uses components sourced from China in its products. Management previously estimated (based on the pre-April tariff announcements) a negative impact of $0.05 in earnings per share (EPS) in 2025 from tariffs. Still, the new tariffs announced in April are expected to have an incremental negative impact of $0.80 in 2025, for a total of $0.85.

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Consequently, on its first-quarter earnings call in late April, management lowered its earnings and cash-flow expectations for 2025:

• Full-year organic revenue growth is still expected in the 2%-3% range.
• Adjusted EPS is now expected to be in the $3.90-$4.10 range, compared with prior guidance of $4.61-$4.75.
• Free cash flow is now expected to be at least $1.2 billion compared to prior guidance of at least $1.75 billion.

CEO Peter Arduini discussed tariffs on the earnings call. He said, "We have conservatively assumed that the bilateral U.S. and China tariffs continue, accounting for 75% of our total net tariff impact." As such, the U.S./China trade tariff conflict is the key relationship to watch for GE HealthCare investors.

Image source: Getty Images.

Growth aspirations

It's a somewhat frustrating situation for investors because the company's investment case rests on the idea that solid underlying but low growth in developed markets would be supplemented by higher growth in end markets like China, where there's a desire to improve healthcare standards.

Management sees China as an attractive long-term market, but tariffs aside, there are near-term headwinds. For example, management lowered guidance last year on lower demand from China, as the hospital capital equipment spending has taken far longer to drop into orders than management expected.

The weakness in 2024 also flows into 2025, with management expecting revenue from China to decline by a mid-single-digit percentage in the first half, followed by a sequential improvement in the second half.

Image source: Getty Images.

What's next for GE HealthCare?

The U.S./China trade relationship will dominate the outlook for GE HealthCare, but that need not be a negative thing now. With the market having priced in some bad news, some trade deal, or at least de-escalation of the conflict, would be good news. Still, that's not a certainty. GE HealthCare competes in China with European peers Siemens Healthineers and Philips, which might find themselves in a stronger competitive position due to the conflict.

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Stifel analyst Stephen Gangaro recently cut his price target on Tesla (NASDAQ: TSLA) to $450 from $455, maintaining a buy rating on the stock. A price target cut is never great news, but it's not a material reduction, and the target still implies a 73% upside over the next 12 months.

A balanced approach

The reasoning behind a buy rating on Tesla is sound, and the analyst's balanced approach makes sense. Tesla indeed faces near-term headwinds, but it's also true that it has near-term catalysts that could drive a re-rating for its stock.

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To management's credit, it acknowledged that Tesla has near-term issues relating to tariffs and brand image, and deliveries were weaker than expected in the first quarter, partly due to not having enough new Model Ys (the best-selling car in the world in 2024) due to losing a few weeks of production as Tesla shifted production to the new model.

Near- and long-term catalysts

On the other hand, unless you are buying undervalued contact lens stocks, myopia rarely pays off when investing. As the analyst notes, Musk announced he would spend more time on Tesla starting in May. Management confirmed Tesla is on track to release lower-cost models this year, the Cybercab is still on track for mass production in 2026, and the "robotaxi" -- initially a Model Y with fully autonomous full-self driving (FSD) -- will be in Austin in June.

In addition, on the earnings call, CFO Vaibhav Taneja noted that "we were able to sell out legacy Model Y in the U.S., China, and a few other markets within the quarter." That's a major plus and could help margins as Tesla won't need to give incentives to sell legacy models anymore, and it should firm up pricing and demand for the newer model.

These potentially positive near-term events could lead to the market pricing in the long-term benefits (ride share revenue from robotaxis, brand development, increased sales and deliveries due to new models, and recurring revenue from FSD). If we throw in a resolution to the tariff conflict, there's potential for upside for Tesla stock.

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• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $287,877!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $39,678!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $594,046!*

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It's not difficult to find stocks likely to go up if the tariff dispute is resolved with a series of trade deals, but what if you want to be a bit defensive and buy some stocks with relatively less exposure to potential tariffs or even some upside exposure? Where better to look for them than among Warren Buffett's Berkshire Hathaway holdings?

Here's why beverage king Coca-Cola (NYSE: KO), building materials maker Louisiana-Pacific (NYSE: LPX), and swimming pool specialist Pool Corp. (NASDAQ: POOL) are worth buying right now to diversify a portfolio.

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Why $8,100 in stocks?

Appreciating that $8,100 is an odd figure, it was selected because the average 40-year-old investor has roughly $162,000 in stocks, and a position in one of these stocks of $8,100 would be equivalent to about 5% of the total portfolio. That's a decent amount to buy a little "insurance."

Coca-Cola remains a longtime Buffett holding

The main drawing points of Coca-Cola, the perennial Warren Buffett holding, are its 2.8% dividend yield and relative safety in the current market. As management outlined on an earnings call in February, Coca-Cola tends to produce and sell locally. As such, it's relatively insulated from the impact of cross-border tariffs.

In addition, its exposure to increased packaging costs -- from, say, tariffs on aluminum -- isn't significant, as the metal is only a small part of its cost component. Its core sparkling soft drink business is also relatively immune to an economic slowdown. It all adds up to make Coca-Cola a safe place to park money in the current environment.

Louisiana-Pacific could be a net winner from tariffs

Louisiana-Pacific, which specializes in engineered wood siding and oriented strand board (OSB), has a bit more complicated relationship with tariffs. CEO William Southern argues that OSB is a "traded commodity." In plain English, that means there's no brand loyalty with OSB, and its pricing is heavily influenced by the costs of wood fiber and resin. As such, increases in tariff costs will feed through into higher prices across the industry.

Its engineered wood siding business sources wood fiber from the U.S. and Canada, and it will be affected by any tariffs placed on Canadian wood fiber. Still, Louisiana-Pacific has two engineered wood siding mills in Canada from which it could potentially increase production for the Canadian market.

Meanwhile, it can produce more in the U.S. from its mills there. In addition, if significant tariffs are placed on Canadian wood fiber, it's likely that the price of its engineered wood siding would rise significantly, and the company's ability to source and produce in the U.S. could be a major plus. While President Trump hasn't imposed a new tariff on Canadian softwood yet, plans are in progress , and Louisiana-Pacific could be a net winner.

In the longer-term view, engineered wood siding can grab more market share from alternatives such as vinyl and fiber cement, and at some point, new housing starts -- its key end market -- will surely start to grow again.

Pool is more resilient than you might think

Pool Corp., the wholesale distributor of pool equipment, is a surprisingly resilient business. While new pool construction is down 50% from the pandemic-induced boom in spending on the home, and management expects new pool construction in 2025 to be flat with 2024, almost 65% of its sales go to the more stable market for maintenance and minor repairs.

That helps to support sales in a slowing discretionary spending environment. In addition, note that the 60,000 new pool units expected this year in the U.S. still represent growth in the installed base of pools, which Pool Corp. could potentially sell into.

Turning to the issue of tariffs, back in February, CFO Melanie Hart said that "we do not have a significant amount of direct imports" and "do not anticipate that the currently enacted additional tariffs from China will have a material impact on sales for 2025."

While tariffs on Chinese products are significantly higher than in February, the "vast majority" of Pool's products are still "purchased domestically," she said. What's less clear is the knock-on impact on costs from its suppliers as they suffer increased costs from tariffs. Naturally, Pool will try to pass them on with price increases, but it's not clear how consumers might react.

Still, the company has good long-term growth prospects, largely because of ongoing pool maintenance spending and an eventual recovery in new pool construction growth.

Image source: Getty Images.

Three Buffett stocks to buy

While all three stocks face some headwinds in 2025, Berkshire Hathaway and Buffett's focus is on the long term, and demand for things like soft drinks, engineered wood siding, and pool products is likely to be a feature of the economy for many years to come.

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Shares in gas turbine, wind power, and electrification company GE Vernova (NYSE: GEV) rose by as much as 10% in early morning trading, only to settle back into a mid-single-digit gain by noon ET. The move comes after its first-quarter 2025 earnings report demonstrated that plenty of life is left in the economy's electrification trend. Moreover, management reaffirmed its full-year guidance -- a significant plus in an economy threatened by an ongoing tariff dispute.

GE Vernova remains on track

Management's strategy is to take advantage of the strength in demand for gas turbines while growing its higher-margin gas services business in the power segment. The good news is that orders of $6.2 billion in the quarter were 1.4 times its $4.4 billion in revenue, indicating more growth to come. An increase in the installed base of gas turbines helped services revenue grow by 18% in the quarter.

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In its second largest segment, electrification, orders remain strong (at 1.8 times revenue in the quarter) as ongoing investment in electric grids and connecting renewable energy to the grid supports growth.

Finally, in the loss-making wind segment, GE Vernova needs to work through legacy offshore wind contracts while focusing on its profitable onshore wind business. The segment remains loss-making overall, but the earnings before interest, taxes, depreciation, and amortization (EBITDA) profit margin improved to negative 7.9% in the quarter compared to negative 10.6% in the first quarter of 2024.

Image source: Getty Images.

What's next for GE Vernova?

Management reaffirmed its full-year guidance for $36 billion to $37 billion in revenue and a high-single-digit EBITDA margin. It's a good result in a market stressing the potential for guidance reductions in light of uncertainty around tariffs.

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Ge Vernova. The Motley Fool has a disclosure policy.

Nvidia partner Vertiv's (NYSE: VRT) stock rose by as much as 21% in early morning trading as the company's first-quarter earnings report confirmed that there's nothing wrong with demand for data center equipment. The stock was up 10.5% around 12:30 p.m. ET. The report contained plenty of positives, and Vertiv continues to offer investors an excellent way to get exposure to AI-led demand for data center capacity.

Vertiv's excellent quarter: Orders

The two major pluses from the earnings report this morning were the hike in full-year sales guidance and the return to impressive yearly order growth. Starting with order growth, investors were disappointed in February when management reported that fourth-quarter orders were flat compared to the same quarter of the previous year. Even though its trailing-12-month orders were up 30% in the fourth quarter, the weak order performance in the quarter raised fears of deterioration in 2025.

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Fortunately, those fears were dispelled by the 13% growth in orders in the first quarter compared to the same period of 2024. Moreover, trailing-12-month orders were up 20%, and the book-to-bill ratio (a key indicator of growth) was 1.4 in the quarter.

Vertiv's excellent quarter: Guidance hike

As for the guidance update, management now expects organic net sales growth of 16.5%-19.5% compared to a prior estimate of 15%-17%. That said, the midpoint of earnings and free cash flow (FCF) guidance was kept the same, even as management raised the high end of the earnings and FCF guidance range due to favorable trading conditions but lowered the low end due to uncertainty around tariffs.

Now trading at less than 24 times the midpoint of FCF guidance for 2025, Vertiv remains an attractively priced growth stock, not least as we are still in the early innings of AI application growth.

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Boeing (NYSE: BA) stock rose by as much as 8.7% in trading before 10 a.m. today. By 12:10 p.m. ET, the stock was up 5.5%. The move comes as investors cheered the company's first-quarter earnings report, which was released earlier. Frankly, the market had reason to be optimistic.

Boeing delivers

The aerospace and defense giant is one of the most fascinating stocks. Yes, it has plenty of near-term headwinds and exposure to risk around tariffs and the economy's overall direction. On the other hand, its well-regarded CEO, Kelly Ortberg, has a huge opportunity to engineer a turnaround at the company simply by executing well.

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As such, Boeing is almost a "self-help" story, and the good news from this earnings report is that the company seems to be starting to help itself. Boeing and Ortberg need to improve the delivery rate on their commercial airplanes, notably the narrow-body 737 MAX, and the profit margin at the Boeing Defense, Space & Security (BDS) business, notably on its troublesome fixed-price development programs.

First, management confirmed that the 737 and the wide-body 787 programs were on track. It expects to reach a monthly delivery rate of 38 and seven, respectively, by the end of the year. That confirms what Boeing supplier Hexcel's CEO, Tom Gentile, said recently, "Boeing is doing very well on their production. They're getting up in rate."

Second, the following chart speaks for itself. BDS generated a 2.5% operating profit margin in the quarter, and management plans to return to high single-digit margins over time.

Data source: Boeing presentations. Chart by the author.

Where next for Boeing

The company still faces risks, not least from tariff conflicts. Still, Boeing's demonstration of operational progress in the first quarter is a significant plus and gives confidence that Ortberg will turn the company around.

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $561,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $606,106!*

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Hexcel. The Motley Fool has a disclosure policy.