We're adding to an industrial that could benefit from a big data center project

Published Fri, Dec 8 202311:54 AM EST

We're buying 120 shares of Eaton (ETN) at roughly $231. Following Friday's trade, Jim Cramer's Charitable Trust will own 250 shares of ETN, increasing its weighting to 1.96% from 1.03%. We're adding to our Eaton position after learning about data center news that makes us even more bullish about this power management company. Late Thursday, Blackstone and Digital Realty announced a huge joint venture to develop $7 billion worth of data centers across Europe and North America. News like this is fantastic for Eaton, whose largest end market by sales is Data Centers & Distributed IT, representing about 15% of sales. It was one of the main parts of our investment thesis when we started buying the stock last month. This is the type of project that Eaton could compete for. Eaton has one of the broadest portfolios of Data Center power management solutions in the industry, helping corporations meet the increased power density requirements of today. The company said on its third-quarter earnings call it thinks the Data Center market will grow at a 16% CAGR from 2022 to 2025, with room for growth beyond given all the investment attention data centers have today. ETN YTD mountain Eaton YTD Comments made Thursday by Jon Gray, president and COO of Blackstone, confirmed as much. In the press release announcing the deal, Gray said, "Data centers are experiencing once-in-a-generation demand growth, driven by cloud adoption and the AI revolution." Gray added that "digital infrastructure is one of our highest conviction investment themes as a firm." If these data centers are built for AI, that would be even better for a company like Eaton. AI data centers require both higher power and higher power density relative to traditional data centers, resulting in three times the electric content. (Jim Cramer's Charitable Trust is long ETN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 4, 2023.

Brendan Mcdermid | Reuters