Mark Twain is rumored to have said: “Through the gold rush, it’s a wonderful time to be throughout the pick and shovel business.”

Whether he did in point of fact say these words or not isn’t all that needed. The larger idea here is that there are prone to be less obvious ways to reap the benefits of situations at any time when a hot latest product hits the shelves.

An incredible example of that’s present within the pharmaceutical industry. Throughout the last couple of years, glucagon-like peptide 1 (GLP-1) agonists comparable to Mounjaro and Zepbound have revolutionized one of the best ways care is provided to diabetes and obesity patients. Eli Lilly is the manufacturer of those blockbuster drugs, and investors have sent the stock soaring over the past two years.

Nevertheless, the investment opportunity surrounding the GLP-1 realm goes much deeper than pharma stocks. One company that’s benefiting big time from rising demand for GLP-1 drugs is Jacobs Solutions (NYSE: J).

Let’s break down what Jacobs Solutions does, and explore why now looks like a lucrative opportunity to scoop up some shares.

What does Jacobs Solutions do?

Jacobs Solutions is in the event business, but not in one of the best ways it’s possible you’ll think. As an alternative of constructing houses, Jacobs focuses on extremely sophisticated and time-consuming infrastructure projects, comparable to data centers, spacecraft, city planning, and life sciences facilities.

Just a few of the corporate’s customers include NASA, Procter & Gamble, and Bristol Myers Squibb.

What makes Jacobs Solutions so unique?

During a recent interview with CNBC’s Jim Cramer, Jacobs’ CEO Bob Pragada shared a extremely interesting perspective on how the company is playing a key role in the long term of GLP-1 development working alongside Lilly.

There are a couple of needed ideas to unpack from the video shared above.

Pragada explains just how complicated Lilly’s GLP-1 facilities are. He makes it clear that these projects normally are usually not simply up for grabs and available for quite lots of builders to bid on. Since competition is amazingly limited and the need for Jacobs’ expertise is high, the company is in a wonderful position to command pricing power for its services.

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Given these dynamics, I’d argue that Jacobs has built a relative competitive moat. Furthermore, the subtle opportunity with Jacobs is that the company tends to win repeat business from its customers during expansion phases.

As Cramer alludes, it’s entirely possible for Lilly to construct additional factories in Asia and Europe should demand for its GLP-1 medications warrant the investment. If this happens, Jacobs looks well-positioned to win this business in the long term and be a tangential beneficiary of various themes fueling its customers.

Why now looks like a terrific opportunity to buy Jacobs Solutions stock

I see a few reasons to buy Jacobs stock straight away.

First, the company recently announced that it’s spinning off its Critical Mission Solutions (CMS) business, along with segments of its Divergent Solutions business — specifically the Cyber & Intelligence business.

Pragada notes that divesting these non-core assets will help make Jacobs “a more focused, higher-margin company more closely aligned with key global mega trends.”

I find these remarks encouraging and see the spin-off as a sign that Jacobs understands where its growth is coming from, and where the company desires to proceed investing.

In accordance with JP Morgan, the total addressable market (TAM) for GLP-1 treatments could reach $100 billion by 2030 just throughout the U.S.

To me, these forecasts imply that GLP-1 demand may be here for quite some time. As a result of this fact, I’m bullish that Lilly might need to proceed investing in infrastructure as a technique to meet supply and demand capacities. For these reasons, I think Jacobs’ relationship with Lilly could possibly be transformative.

Outside of the burden loss space, Jacobs will be playing a quiet role in various areas of artificial intelligence (AI), including data centers and electric vehicle production.

As of the time of this text, Jacobs trades at a forward price-to-earnings (P/E) multiple of 16.1. Compared, the forward P/E of the S&P 500 is around 21.7.

The company’s discounted valuation relative to the broader market could suggest that investors are overlooking Jacobs Solutions. While the company itself might be not selling breakthrough medications or AI software, these opportunities still represent major bellwethers for Jacobs since it helps leading players throughout the background.

The long-run secular tailwinds fueling plenty of the markets during which Jacobs operates, combined with the company’s competitive edge and reasonable valuation, make it a compelling investment opportunity in my eyes.

Do you might have to take a position $1,000 in Jacobs Solutions straight away?

Before you buy stock in Jacobs Solutions, consider this:

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JPMorgan Chase is an promoting partner of The Ascent, a Motley Idiot company. Adam Spatacco has positions in Eli Lilly. The Motley Idiot has positions in and recommends Bristol Myers Squibb and JPMorgan Chase. The Motley Idiot has a disclosure policy.

If You Like Eli Lilly, Then Chances are you’ll Love This Little-Known Specialty Manufacturing Stock was originally published by The Motley Idiot