Consult any energy sector report, and you’ll discover that the country’s grid infrastructure requires a major facelift. This means portfolio managers are keeping a close eye on manufacturers that build essential equipment like transformers and switchgear—or provide services like cooling solutions for the server racks in data centers.

“The industrial companies are in the sweet spot,” Stephanie Link, who oversees a $5.4 billion portfolio as chief investment strategist at Hightower Advisors, recently said in an interview with Fortune.

Investors have already piled into the grid-building space, with many top picks trading at the types of lofty premiums that have led to a multitude of warnings about an overly frothy AI trade. For investors playing the long game, however, it could still pay to hop on the bandwagon.

Link was struck by a comment from the CEO of Quanta Services, a Fortune 200 company projected to earn $23.7 billion in revenue for 2024, per Visible Alpha. Duke Austin, who leads the electrical and pipeline contractor, told analysts after Q1 that the energy needs of data centers in the company’s network were “mind-blowing.”

“I don’t think I’ve heard a CEO say anything like that before in my lifetime,” said Link, who is also a regular CNBC contributor. “These are conservative industrial manufacturing, old-school companies that are seeing a lot of business and a lot of upside.”

America’s energy needs skyrocket as its grid ages

The boom has a lot to do with timing. Much of America’s grid infrastructure was built in the 1960s and 1970s, and 70% of its transmission lines are over 25 years old and approaching the end of their typical 50- to 80-year lifespan, according to the U.S. Department of Energy.

That’s happening just as the country’s electricity demand is skyrocketing for several reasons—such as data center demand, which could jump an estimated 160% by 2030, per Goldman Sachs.

But there are plenty of other factors at play, too, including the wave of “reshoring” among American manufacturers. Rising global temperatures, meanwhile, intensify the need for air conditioning. On the other hand, the clean energy boom—and the growing adoption of green products like electric vehicles and heat pumps—all put more strain on the system.

According to Bloomberg New Energy Finance, the stated goal of the U.S. to transition to a net-zero economy by 2050 represents a $41 trillion opportunity. While stocks of renewable energy companies plunged in the wake of Donald Trump’s election victory, rebuilding the grid to meet insatiable demand is likely a bipartisan imperative, said Jennifer Boscardin-Ching, who specializes in clean energy and environmental investing at Geneva’s Pictet Asset Management.

“If investors are as excited about technology, about AI, about computing and data centers,” she told Fortune, “then they should be also as excited about electricity and networks and energy efficiency solutions.”

Three stock picks for the grid transformation

Both Boscardin-Ching and Link are excited about the so-called picks and shovels of grid transformation. Here are three of Link’s favorite companies:

• The aforementioned Quanta Services (NYSE: PWR) boasts one of the largest skilled workforces in the industry at over 60,000 employees, providing a major competitive advantage. “Companies can’t find these people,” Link said, “and [Quanta has] got them locked and loaded.” As of last quarter, earnings per share over the past 12 months are up over 60% compared with the same period two years ago.
• On the latest earnings call for Eaton Corp. (NYSE: ETN), CEO Craig Arnold noted that the company has been contracted for $1.6 trillion worth of “megaprojects,” which are each valued at $1 billion or more. Only 16% of those jobs have been started, he said, and the company currently has a backlog of $1.8 trillion, up 30% from last year. “Eaton used to be a really old, stodgy manufacturing company, and all of a sudden they’re at the cutting edge,” Link said.
• The least established name in the bunch, Vertiv Holdings (NYSE: VRT) only started turning a profit in 2021, but net income has soared over 650% in the past two years. Link is a big fan of chairman David Cote, formerly the longtime CEO of Honeywell. “He’s such a good operator,” she said. “He’s such a good visionary.”

Vertiv has led the way as all three stocks have far outpaced the S&P 500 this year, so it should be no surprise that these stocks are not necessarily cheap. Quanta, Eaton, and Vertiv currently trade at roughly 32, 29, and 36 times their projected earnings over the next 12 months, respectively, according to estimates from S&P Capital IQ. Those multiples are elevated compared with most of their peers and the S&P’s current forward P/E ratio of about 24.

“It’s something to be very mindful of,” Link said. “But I do think there are so many ways for these companies to win.”

Amid the AI frenzy, Link is confident the grid build-out will prove to be far more than a bubble. Long-term investors, she said, can monitor for a pullback before upping their exposure.