The Future Is Coming Into Focus
Lately, I’ve been seeing things more clearly.
It’s becoming obvious that the next decade will be shaped by an explosion of new technologies. I’m talking about AI systems, intelligent machines, autonomous tools, robots, and data centers — the kind of innovations that not long ago felt like science fiction are now quietly becoming reality.
At the center of this shift is one critical ingredient: power. It’s no secret — AI runs on electricity. A lot of it. And that’s fueling one of the biggest infrastructure buildouts we’ve seen in decades. Data centers are rising across the country. Old substations are being overhauled. Utilities are racing to keep up with the demands of this new industrial era. This isn’t just about software anymore. It’s about transformers, transmission lines, and the hardware that makes everything else possible.
So, I’ve been doing what I always do — looking for the companies that sit quietly behind the scenes. The ones supplying the tools, components, and systems that make this boom possible. “Picks and shovels” businesses that don’t rely on headlines or hype, but benefit directly from the real-world demand being created by AI, cloud computing, and electrification.
And this month, I found one. It’s a company that’s already positioned itself as a leader in the energy transition space — and now it's aiming straight at the growing infrastructure needs of data centers and storage systems. It’s trading for around $5 a share, has a clean balance sheet, and a pipeline full of future business. In my view, this one checks all the boxes: essential, overlooked, and deeply connected to the direction the world is heading. Let’s get into it.
A Steady Play on the Surge in Electricity Demand
If you're paying attention to the biggest themes shaping the market right now, one trend stands out: the coming wave of electricity demand.
Artificial intelligence, data centers, electric vehicles, and next-gen factories are all ramping up — and they’re hungry for power. Big Tech is pouring billions into new infrastructure, governments are pushing for grid upgrades, and behind it all is a quiet, essential player helping wire up the new energy economy.
That company is Shoals Technologies Group (Nasdaq: SHLS).
Shoals doesn’t make flashy solar panels or batteries. Instead, it builds the backbone — the infrastructure that makes clean energy flow. Think cables, connectors, harnesses, and power distribution systems — the components that move electricity from where it's generated (solar panels or batteries) to where it’s used (the grid, a data center, or a commercial facility). It’s the hidden but essential layer of hardware that connects everything.
What Shoals Does
Based in Tennessee, Shoals is a leading provider of electrical balance of system (EBOS) solutions — the wiring and electrical architecture that ties a solar or storage project together. In a traditional EBOS setup, installations require thousands of feet of field wiring, combiner boxes, and on-site labor to route, terminate, and test individual connections. This approach is complex, time-consuming, and labor-intensive — and any installation error can result in major reliability issues or safety risks.
Shoals’ competitive edge is its patented Big Lead Assembly (BLA) — a pre-engineered, plug-and-play EBOS solution that replaces all that messy field wiring with a streamlined, modular cable system. The BLA reduces the need for skilled electricians on-site, shortens installation time, and improves long-term reliability. By simplifying the installation process and minimizing points of failure, it lowers both capex and opex for developers. And because Shoals designs and manufactures the entire system in-house, customers get a single-vendor solution that’s faster, safer, and easier to scale.
This is why Shoals doesn’t compete on price alone. It competes on engineering, safety, and total lifecycle cost — and that’s a formula that’s resonating with top-tier customers. They’re not just selling parts; they’re delivering complete EBOS systems that integrate seamlessly into large-scale solar and storage projects.
Now, the company is expanding beyond solar.
While Shoals made its name in utility-scale solar, it’s now expanding into battery energy storage systems (BESS) — a rapidly growing segment essential to balancing the grid and maximizing the value of intermittent renewables. As more utilities and developers build out energy storage capacity, Shoals is supplying the wiring, disconnects, and power management systems that connect batteries to inverters, substations, and the broader grid. This is a natural extension of their EBOS expertise — and it's not a side project. It's a strategic growth driver for the next decade.
Shoals is also targeting the data center infrastructure boom. These facilities require massive amounts of power, and they need to move that power with precision and safety. Shoals’ experience in delivering high-performance electrical solutions for solar and storage makes it uniquely qualified to step into this space. The same expertise that powers clean energy projects can now help power the AI revolution — from hyperscale cloud centers to edge computing hubs. This is a natural extension of what Shoals already does best.
Shoals is also making tangible progress on its international strategy. On July 8, the company announced a new contract with CJR Renewables to supply its patented Big Lead Assembly (BLA) system to a large solar project in Chile. This marks Shoals’ official entry into the South American market — a key milestone in its global growth plan.
The project will be the first in Chile built using the BLA system, which is designed to simplify installation, reduce labor needs, and boost long-term reliability. Once complete, the project will generate enough electricity to power over 86,000 homes and offset more than 62,000 tons of CO₂ emissions annually. This deal not only strengthens Shoals’ foothold in Latin America, but also reinforces the company’s ability to bring its high-quality EBOS solutions to new geographies where clean energy demand is accelerating.
Riding the Voltage Shift: From 1.5kV to 2kV
There’s a quiet but important evolution happening in the solar world — one that plays right into Shoals’ strengths.
The industry is shifting from 1.5kV (1,500 volts) systems to 2kV (2,000 volts) in large-scale solar projects. This may sound like a technical detail, but it’s a big deal — and it’s all about efficiency and cost savings.
Higher-voltage systems allow more power to travel through the same wiring infrastructure, which means developers can connect longer strings of solar panels — each “string” being a series of panels wired together — and extract more energy from each one.
This results in higher energy yield per string and reduces the number of strings, cables, and other components needed on site. With fewer components to install and maintain, project costs go down.
These systems also suffer from less electrical loss — the energy that normally dissipates as heat during transmission — which improves overall efficiency. All of this makes higher-voltage architectures more attractive from both an engineering and financial standpoint.
But not all EBOS providers are ready for this transition. Shoals, thanks to its engineering expertise and ongoing product innovation, is already delivering solutions that meet the stricter demands of 2kV systems, giving it a leg up as the industry evolves.
Financials
Annual Financial Information
| In USD$ | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Revenues | $213M | $327M | $489M | $400M |
| Gross Profit | $82M | $131M | $168M | $142M |
| Gross Margin | 38% | 40% | 34% | 36% |
| Net Income(loss) | $2.3M | $127M | $40M | $24M |
| Cash | $5M | $8M | $22M | $24M |
| Debt | $245M | $237M | $179M | $141M |
| FCF Margins | -3.9% | 11% | 17% | 18% |
| Free Cash Flows (outflows) | $29.3M | ($0.2M) | $1.3M | $41.9M |
| ROE | -2.5% | 87% | 9.5% | 4.4% |
Shoals kicked off 2025 with a softer first quarter, as revenue and earnings came in lower than last year — but in our view, this looks more like a temporary slowdown than a sign of long-term weakness.
Revenue came in at $80.4 million, down 11.5% year-over-year, reflecting a mix of strategic pricing changes, volume-based discounts, and shifts in customer and product mix. Still, gross margin held firm at a healthy 35%, underscoring Shoals’ ability to deliver premium, engineered systems despite the near-term headwinds. Adjusted EBITDA landed at $12.8 million — also down from the prior year — but management emphasized that project activity is ramping up and that order visibility remains strong heading into the second half of the year.
On the bottom line, Shoals posted a slight net loss of $0.3 million, or $0.00 per share — essentially break-even — compared to earnings of $0.03 per share in Q1 2024. General and administrative expenses ticked lower, but litigation costs related to legacy warranty issues remain a drag for now. That said, Shoals continues to generate solid cash flow, with operating cash flow turning positive in the quarter and capital expenditures still modest.
The balance sheet remains in good shape, with $35.6 million in cash and $141.8 million in borrowings under its revolving credit facility. The company’s current ratio stands at 2.34x, and debt-to-equity sits at just 0.25x, giving it room to invest in growth without overextending financially.
One of the most encouraging signs this quarter came from Shoals’ backlog and awarded orders, which grew 5% year-over-year to $645.1 million. That pipeline includes a meaningful $500 million in projects scheduled for delivery over the next four quarters, and over 13% of it is tied to international markets. This steady demand is evidence that Shoals’ expansion into new verticals — like BESS and data center infrastructure — is beginning to pay off. Management also highlighted early commercial success in OEM partnerships and the CC&I (commercial, community, and industrial) space, which helps diversify revenue beyond traditional utility-scale solar.
Looking ahead, Shoals expects Q2 revenue to jump to between $100 million and $110 million, with Adjusted EBITDA rising to $20 million–$25 million. For the full year, they’re guiding to $410–$450 million in revenue, and $100–$115 million in Adjusted EBITDA — a clear acceleration from Q1. Operating cash flow is projected to come in between $30 million and $45 million for the year, even after capital expenditures of $25 million to $35 million. It’s a conservative but confident forecast — and if the demand for AI infrastructure and battery storage plays out as expected, there may be upside surprises in the quarters ahead.
The Big Picture
The AI boom isn’t just a software story. It’s an infrastructure story — one that runs on electricity, and a lot of it.
Shoals isn’t the flashiest name in clean energy — but in my view, it’s one of the most quietly essential. This company builds the power infrastructure that solar farms, storage systems, and soon data centers can’t run without.
Their patented BLA system is a meaningful improvement over traditional wiring methods, and it’s catching on. Their backlog tells the story: $645 million in future projects, with strong visibility into the next 12 months.
But let’s be honest — the stock has been a disappointment since its IPO. Shoals went public in early 2021, riding the clean energy momentum wave, and traded as high as $39 per share. Today, it’s under $6. A lot of that drop was driven by macro conditions: rising interest rates, shifting investor sentiment, and overvaluation across the entire solar and renewables sector. The market has rerated these businesses, and Shoals got caught in the storm. Still, while the stock price has dropped, the company’s revenues and pipeline have continued to grow.
Financially, the company is in a much stronger position today than it was during its IPO peak. Back in 2021, Shoals carried $245 million in debt. That figure is now down to $141 million — nearly cut in half — thanks to disciplined capital management and improving cash flows. Over the same period, revenue has nearly doubled, climbing from $213 million in 2021 to $400 million in 2024, a growth of 88%. The business has scaled efficiently, and despite market volatility, Shoals has continued to strengthen its financial footing while expanding its customer base and product reach.
They’ve also locked in long-term relationships with top EPCs and are gradually diversifying into new verticals like battery storage, data centers, and international markets. These aren’t speculative moonshots — they’re natural adjacencies to what Shoals already does well.
From where I sit, this is a company that got ahead of itself in 2021, got punished in 2022 and 2023, and is now quietly rebuilding momentum. Their valuation has normalized, their backlog is healthy, and their focus on reliability and innovation gives them staying power. I started a half position at $4.90 and will be watching closely. If Shoals continues to execute, I’ll look to add. This is the kind of stock I like — overlooked, essential, and built for the long haul.
Defense, Offense, and Dry Powder
I’ve been writing for the past two years about how I see the current geopolitical picture escalating, and while it’s taken a bit longer than I expected, things are starting to fall into place almost exactly as I imagined.
Something big is brewing — in the markets and on the world stage. Europe is quietly preparing for war. The U.S. and China are deep into a trade and tech cold war. And now, we’re seeing it: commodities are becoming leverage points. China is using rare earths as bargaining chips. Countries are stockpiling critical materials. Resource security is becoming national security. It's on.
Commodities are about to become the next hot sector — not just because of the arms race I see unfolding, but also because of the infrastructure arms race tied to AI, clean energy, data centers, and the electrification of everything.
The only real threat to rising commodity prices would be a sharp global recession. But even in that case, I don’t see Big Tech cutting back on its capex meaningfully. In other words, the demand drivers are solid.
So I’ve been positioning the portfolio to take advantage of a commodities bull market, a tech boom, a global conflict, and a potential recession — all at the same time. Here’s how it looks:
Trendpost Portfolio Holdings
| HOLDING | EXPOSURE/PURPOSE |
| Cash | Over 55% in money market ETFs and GICs. Not going below 50%. Dry powder for volatility. |
| EQT | Direct exposure to U.S. natural gas. |
| ENCC.TO | ETF: 10%+ yield, monthly income. Energy sector exposure. |
| BASE.TO | ETF: 10%+ yield, monthly income. Exposure to base metals like copper and steel. |
| SILJ | ETF: Exposure to junior silver miners. |
| ARG.TO | Amerigo Resources — copper exposure. 6% yield. |
| WCP.TO | Whitecap Resources — Canadian oil and gas. 8% yield. |
| LIF.TO | Labrador Iron Ore Royalty — exposure to iron, a foundational material. 7% yield. |
| NB | NIOCORP - Early-stage U.S. miner with exposure to niobium, scandium, and rare earths. Not yet in production. |
| ETHY.TO | ETF: 18%+ yield, monthly income. Ethereum exposure. |
| BTCY.TO | ETF: 9%+ yield, monthly income. Bitcoin exposure. |
| ZWEN.TO | ETF: 10+ yield, monthly income. Large-cap global energy companies. More energy exposure. |
| ALAB | Exposure to the AI boom. |
| RMBS | Exposure to the AI boom. |
| SHLS | Exposure to energy transition (solar) and a potential play on the surge in electricity demand driven by AI and data centers. |
Whether we’re heading into a recession or continuing this bull market, I believe this portfolio is built to hold up — and even thrive. Ideally, we’ll see more turbulence in the months ahead. That would give me exactly what I want: better entry points and high-quality bargains.
For now, I intend to keep at least 50% of the portfolio in cash. I want to stay nimble. I believe something big is coming—a shock, an event, a reset—and when it hits, I’ll be ready. Both to brace for impact and to scoop up high-quality bargains.
Because when the storm hits, I plan to be ready. Until then, stay patient. The real move is coming.
Remember that the content of this newsletter is neither a stock recommendation nor investment advice. This is just something to consider. You can access my watchlist and portfolio through the link below. By clicking the link below you accept all responsibility for any potential losses that might result from buying any of the stocks mentioned in this newsletter.