Baron Asset Fund on Quanta Services
Thesis
Quanta provides infrastructure solutions across electric and gas utilities, renewable energy, communications, pipelines and other energy markets. Shares benefited from enthusiasm around AI, data centres and power infrastructure as well as strong first-quarter earnings that prompted management to raise full-year guidance. Management believes earnings can grow at a mid-to-high teens rate or better through at least the end of the decade, supported by grid modernization, electrification, the energy transition, industrial reshoring and communications upgrades. Baron believes this growth is achievable and points to Quanta's 25% earnings CAGR since 2015 as evidence of execution through a less favorable historical environment.
“We remain long-term shareholders in Quanta and continue to see compelling growth prospects for the business.”