Nextpower (NXT) has quickly emerged as a notable player in the clean-energy hardware space, building advanced power conversion systems and robotics that support the accelerating global shift toward electrification. We believe NXT stock could be a strong investment option. Why? Because it offers strong margins, a low-debt capital structure, and strong momentum – with potential for growth as the stock is significantly below its 52-week high.
Several Factors Favor NXT Stock
NXT has increased by 140% this year so far, but it still has more potential for growth due to its solid fundamentals and the fact that it is 20% below its 52-week high. Nextpower’s recent rebranding demonstrates its transition into a comprehensive energy solutions provider, offering advanced power conversion systems and robotics to cater to the rising global electricity demand. This broadened offering and robust customer demand contribute to healthy operating margins and a record backlog that surpasses $5 billion. The company boasts a debt-free balance sheet, holding $845 million in cash as of September 2025. Despite a recent decline of 6.2%, the stock has surged by 140% year-to-date, supported by favorable analyst forecasts.
Its Fundamentals Appear Strong
- Long-Term Profitability: Approximately 16.7% operating cash flow margin and 19.9% operating margin based on a 3-year average.
- Strong Momentum: Currently ranks in the top 10th percentile of stocks regarding “trend strength” – our exclusive momentum metric.
- Revenue Growth: Nextpower experienced revenue growth of 20.4% for the last twelve months and a 27.1% average over the past three years, but this is not primarily a growth story.
- Room To Grow: Despite its strong momentum, NXT stock is trading 20% less than its 52-week high.
Below is a brief comparison of NXT fundamentals with S&P medians.
While NXT stock may present a tantalizing investment opportunity, it’s essential to understand the historical drawdown experiences of the stock. NXT faced a drop of 68% during the Dot-Com crash, decreased by 64% amid the 2008 financial crisis, and fell by 58% in the 2022 inflation squeeze. Even lesser downturns, such as those in 2018 and the Covid crash, saw it decline by more than 25%. While sound fundamentals are important, this stock is not insulated from substantial drops when the market experiences turbulence.
NXT Is Just One of Many Such Stocks
You may also want to consider:
- Lam Research (LRCX)
- Newmont (NEM)
- Ubiquiti (UI)
We selected these stocks based on the following criteria:
- Market capitalization exceeding $2 billion
- High operating or cash flow from operations margins
- No significant revenue decline in the past 5 years
- Low-debt capital structure
- Strong momentum
A portfolio that commenced on 12/31/2016 with stocks meeting the above criteria would have achieved the following:
- Average 12-month forward returns of nearly 15%
- 12-month win rate (the percentage of picks returning positive) of approximately 60%
Portfolios Succeed When Stock Selections Underperform
Stocks rise and fall – the crucial aspect is remaining invested. A diversified portfolio ensures you stay in the market, enhances returns, and mitigates single stock risk.
The Trefis High Quality (HQ) Portfolio, consisting of 30 stocks, has consistently outperformed its benchmark, which includes all three – the S&P 500, S&P mid-cap, and Russell 2000 indices. What accounts for this? Collectively, HQ Portfolio stocks have delivered superior returns with reduced risk compared to the benchmark index; less volatility is apparent in the HQ Portfolio performance metrics.
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