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5 Boring Stocks About to Become Very Interesting |
They don't make chatbots. |
They aren't designing the next AI chip. |
And you probably won't hear their CEOs talking about artificial intelligence on CNBC. |
But AI suddenly needs exactly what these companies sell. |
Our analysts identified five overlooked businesses whose products and infrastructure are becoming increasingly important as Big Tech expands. |
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THE EVENING BRIEF · OCTOBER 26, 2026 |
💉 The small components behind West’s bigger growth business |
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The high-yield spread widened from 327 to 340 basis points between October 21 and 22. That does not forecast a drug supplier’s quarter. It does make me less willing to pay for a growth adjective without checking what customers actually purchase. At West Pharmaceutical Services, the specific product group is high-value components used in injectable medicines. The opportunity is smaller than a drug-company headline and potentially more repeatable: supplying part of the package that lets another company deliver its medicine safely. |
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📉 WHAT THE BOND MARKET SAYS |
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Oct. 23: unchanged from Oct. 22 |
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Oct. 22: above the prior 16.68 |
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Oct. 22: 13 bp wider than Oct. 21 |
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Source: FRED; observation dates shown separately. |
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West’s July 23 report put numbers behind that distinction. High-value component sales reached $424.1 million in the second quarter, with organic growth of 18.4%. The group represented 49% of company sales. That is too large to dismiss as an interesting sideline. The relevant investment question is whether this business can keep becoming a larger part of West, with enough production efficiency to improve what shareholders retain. Sales mix is a starting point. It is not a substitute for examining margin, capital spending and cash collection. |
Eric Green, West’s chairman and CEO in that July 23 release, highlighted biologics, component upgrades and demand for elastomers associated with GLP-1 medicines. I am interested in the supplier connection rather than trying to choose the winning drug. West sells into a customer’s manufacturing requirements. A successful medicine can create recurring demand for the surrounding components, but customer concentration, inventory adjustments and qualification cycles still matter. An 18.4% organic increase does not establish how much of that demand is durable. It tells us where the next set of questions belongs. |
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⚖️ THE DISAGREEMENT |
Green’s July 23 case emphasizes broad demand from biologics and GLP-1 medicines. Mercer’s October 26 case requires the retained high-value component business to turn that demand into profit and cash. |
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Then comes the accounting wrinkle. On July 1, West completed the sale and transfer of manufacturing and supply rights for its SmartDose 3.5mL system and the associated facilities. It retained development and manufacturing of other SmartDose versions, including 10mL. That matters because the next reported sales comparison contains a business-boundary change. You can lose revenue from a product you transferred without losing the customer demand that remains in your portfolio. You can also overuse that explanation. The retained categories still have to produce their own evidence. |
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West’s July outlook made the gap explicit: third-quarter reported sales growth of 1.9% to 3.8%, against organic growth of 7.0% to 8.9%. Approximately $30 million of prior-year SmartDose 3.5mL sales would be excluded from the organic comparison. The lower reported range therefore was not management’s description of a suddenly flat retained business. It was a forecast using two different comparison bases. I would keep both on the page. Erasing the reported number would be just as unhelpful as pretending the organic number explained every dollar of change. |
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🕰️ THE COMPARE-TO |
July 1, 2026 changed West’s perimeter: SmartDose 3.5mL manufacturing and supply rights transferred, while other versions remained. The July 23 outlook then separated 1.9%–3.8% reported growth from 7.0%–8.9% organic growth for Q3. Thursday tests that distinction. |
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What would make the component opportunity better? More high-value work reaching operating profit and cash, with enough capacity to serve customers without endlessly demanding another round of spending. West generated $128 million of free cash flow in the second quarter after $85.9 million of capital expenditure. Those are historical figures, not a promise for Thursday. They give us a concrete starting balance between growth and the cost of supporting it. A component can be small enough to miss in the finished medicine and still be large enough to matter in the supplier’s accounts. |
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MERCER’S NOTE |
The missing sales line can explain the comparison. It cannot explain away the cash result. |
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🔭 CLEARED THE SCREEN |
The completed October 23 scan returned 183 names in the price, volume and percentage-move band. CART was the one selected after the deeper checks. Instacart closed at $56.44, above September 3’s $52.68 high, which capped every later session through October 22, on 16.10 million shares, about 5.1 times the preceding 20-session average. The symbol news feed returned no items in the checked window; that is a feed result, not proof that no news exists. The company’s dated calendar puts earnings after the close November 5. For Tuesday, October 27, $52.68 is the reference: retaining that former ceiling would preserve the breakout structure; falling back through it would weaken the read. No claim about Monday’s closing price belongs here. |
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West’s own operating evidence follows on Thursday. |
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📅 THURSDAY’S RETAINED-BUSINESS CHECK |
West plans to release third-quarter results before the market opens October 29, followed by its 8 a.m. Eastern call. Look for the high-value component line, the divestiture reconciliation and the cash result together. Strong retained demand with disappointing conversion into cash would temper my interest; healthy growth and better conversion would strengthen it. See the component sales and the two growth forecasts, and read exactly which SmartDose rights changed hands. A slower headline could conceal a better business mix. It has to earn that interpretation. |
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Finish this sentence in a reply: I would look past West’s slower reported growth if Thursday showed ___. |
— David Mercer, Senior Market Analyst |
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(From Good Morning Alerts) |
See the price levels beside the stock idea |
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