Electricity demand is climbing as data centers, AI workloads, and electrification plans put extra pressure on already stretched grids. At the same time, supply risks in key energy chokepoints are pushing governments and utilities to focus more on resilient, flexible power systems. That mix of higher demand and energy security concerns is pulling attention toward companies exposed to grid equipment, transmission, metering, substation technology, and energy storage. This article walks through 3 stocks from our Electrification and Grid Modernization Stocks screener that appear positioned to engage with these themes based on the latest news catalysts.

Toromont Industries (TSX:TIH)

Overview: Toromont Industries is a Canadian equipment and refrigeration specialist that sells, rents, and services heavy machinery, industrial engines, and power systems. Its CIMCO unit designs and maintains large-scale refrigeration and thermal management solutions for industrial and recreational customers.

Operations: Toromont generates most of its revenue from the Equipment Group at about CA$4.8b, with around CA$527m coming from the CIMCO refrigeration and thermal management business.

Market Cap: CA$19.4b

Investors looking at electrification and grid modernization may find Toromont Industries interesting because it combines Caterpillar based power systems for data centers and grid projects with a large equipment and service footprint that feeds recurring product support revenue. Recent contract wins for power systems, a planned Hamilton facility, and a new remanufacturing center in Quebec all suggest that management is focusing on long dated infrastructure demand. Earnings and dividends are currently supported by equipment sales, rentals, and refrigeration projects. The trade off for investors is a relatively rich P/E multiple and reliance on a key supplier, which raises questions about how much future growth is already priced in and how smoothly Toromont can scale without overbuilding capacity.

Toromont’s rich P/E and long dated infrastructure push make the real question whether earnings can keep up with expectations, so review the full analyst forecasts for Toromont Industries and see what the market might be missing.

Southern Cross Electrical Engineering (ASX:SXE)

Overview: Southern Cross Electrical Engineering is an Australian contractor that designs, installs, and maintains electrical, communications, security, and fire systems for data centers, commercial buildings, resources projects, and public infrastructure, with a growing role in decarbonization projects such as solar, wind, and battery supported power assets.

Operations: Southern Cross Electrical Engineering generates about A$691.2m from electrical, security, and communication services, with total reported revenue of around A$753.1m, all earned in Australia.

Market Cap: A$1.27b

Southern Cross Electrical Engineering sits in the path of rising electricity demand and data center buildouts, with management highlighting over 20 years of data center work and a record order book tied to power hungry digital infrastructure and electrification projects. The company is also exposed to Australia’s energy transition, working on grid related renewables, storage, and efficiency upgrades, which fits the electrification and grid modernization theme. At the same time, very low recent profit margins, heavy use of external funding, and the impact of large one off items, including a A$46.1m loss, illustrate how volatile contracting earnings can be. In addition, recent insider selling and equity raisings mean investors have several factors to weigh up around quality, funding, and the timing of the pipeline turning into durable profits.

Southern Cross Electrical Engineering’s record order book and long history in data centers suggest the story could be building faster than the headline margins imply. Walk through the 2 key rewards and 3 important warning signs to see what might be lurking beneath the contract wins.

ESCO Technologies (ESE)

Overview: ESCO Technologies is a US industrial group that supplies specialized components, filtration, diagnostic tools, and RF testing systems used in aerospace, defense, utilities, and industrial applications, with products ranging from aircraft landing gear parts and naval signature management to grid monitoring and secure communication facilities.

Operations: ESCO Technologies generates about US$600.8m from Aerospace & Defense, US$383.6m from its Utility Solutions Group, and US$263.6m from Test products and systems.

Market Cap: US$9.1b

ESCO Technologies sits at the intersection of rising electricity demand and growing spending on critical infrastructure. Its Utility Solutions Group supplies diagnostic and decision support tools that help utilities manage grid stress from data centers, AI, and electrification. Earnings growth has been strong and revenue guidance for 2026 points to solid expansion, yet the stock trades on a very high P/E and the company is taking on significant new debt to fund the US$2.35b Megger acquisition, which raises questions about integration risk and future returns. To assess whether ESCO’s mix of utility, aerospace, and defense exposure justifies that premium, investors may need to look beyond the headline growth story.

ESCO Technologies’ high P/E and Megger deal hint that the headline story may not match the full picture yet, so walk through the analyst forecasts for ESCO Technologies to see what could reshape the risk reward profile next.

The 3 stocks in this article are only a starting point. The full Electrification and Grid Modernization Stocks screener surfaces 38 more US, UK, Canadian, and Australian companies that share similar electrification and grid themes and each carry their own potential narrative for rising electricity demand. Use Simply Wall St to identify, filter, and analyze the specific catalysts and storylines that matter most to you so you can focus on the electrification and grid modernization stocks that best fit your highest conviction ideas.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.