Opinions
Brett Girard, CPA, CA, CFA
A.O. Smith
AOS-N
BUY
Nov 13, 2024
Stock price when the opinion was issued
You might be interested:
A. O. Smith Corporation, with headquarters in Milwaukee, Wis., is a global leader applying innovative technology and energy-efficient solutions to products manufactured and marketed worldwide. The Company is one of the world's leading manufacturers of residential and commercial water heating equipment and boilers, as well as a manufacturer of water treatment and air purification products. Social media mentions are up 500% in the past 24h.
Compound annual returns have been 14% over 10 years, 17% over 20. He's owned this for a long time and sees no reason to sell it. Yes, a slowdown in US construction effects part of their business, but there will be long-term growth in China. Growth rates will endure. Water remains a major issue in the world.
Water filtration, boilers, water technology. About 75% of sales are domestic US, so tariffs are not much of an issue. Things like devastation from California wildfires will push demand. Missteps in China and India. Dividends continue to grow ~12% a year. High quality name, relatively cheap compared to historical levels. Yield is 1.9%.
(Analysts’ price target is $82.83)
Water filtration and boilers. Big trend around the world with population growth. Stumbled on sales in China, whose economy is struggling. Moving into India, where it's been a great success. Future is bright. Add to your position if you're not already overweight.
Dividends grew 13% last year, 11% per year over 5 years, 35% per year over 10 years. Getting paid to wait. Sometimes the market just doesn't recognize the value of a company, and then some catalyst (impossible to know what or when) comes along to unlock value.