Editor’s Note: In today’s Money & Markets Daily, we’re revisiting two stocks Managing Editor Chad Stone featured during last summer’s heat wave. We’re still dealing with record temps around the world, so let’s see how these stocks rate now…
After living in South Florida for over 10 years, I’ve developed ground rules to survive the blistering summer heat as best I can:
- Start early. If you want to do something outside, get up and get out.
- Channel your inner camel and drink tons of water.
- Invest in sun hats and a good reflective sun umbrella. I’ll trade looking goofy for not being cooked alive.
- Get your A/C serviced before it’s too late. (I learned this one the hard way!)
With these guidelines, I’ve managed to find a sweaty summer groove.
Speaking of sweat … this is setting up to be the most punishing summer ever. The world just recorded its hottest day on average, and scientists expect it to only get worse as global warming and the El Niño weather phenomenon converge.
(2024 Update: Yep, it’s still brutal out there. On Monday, The European Climate Service reported the hottest day ever on record, with temperatures averaging 62.87 F. And that record was broken the next day!)
And that’s got me thinking about ways to use Adam O’Dell’s Green Zone Power Ratings system to find stocks that could benefit during the heat wave and beyond.
So find some shade and read on…
A Cool Start
What better place to start than one of America’s largest heating and air conditioning companies, and one that’s headquartered right up the road from me: Carrier Global Corp. (NYSE: CARR).
But if you’re looking to crush the market with an HVAC stock, CARR is a pass, according to Green Zone Power Ratings.
CARR’s Green Zone Power Ratings in July 2024.
Carrier stock rates a “Bearish” 25 out of 100 in Adam’s system. Bearish stocks are expected to underperform the broader market over the next 12 months.
When I reported on this stock last year, it was “Neutral.” It has gained 19% since last July, but that’s in line with the broader S&P 500’s gain of 18% over the same time.
Now, its Value rating has sunk to 13 after investors have bid up CARR’s price beyond its true value. Growth is looking weaker as well. Revenue is up, according to its June earnings report. But that’s alongside double-digit declines in net income, diluted EPS and net profit margins.
A hot summer could help CARR stock, but there are better stocks out there, according to Green Zone Power Ratings.
Let’s move further south to find a stock for the summer heat wave.
This HVAC Stock Is Still Bullish
When I started my research, Watsco Inc. (NYSE: WSO), a Miami-based HVAC and refrigeration distributor, was not the first stock on my list.
Our chief research analyst, Matt Clark, wrote about WSO back in 2022 when it appeared on his Green Zone Power Ratings scan.
Its ratings have declined slightly, but WSO is still in the “Bullish” zone of Green Zone Power Ratings.
WSO’s Green Zone Power Ratings in July 2024.
With a rating of 74 out of 100, Watsco stock is expected to outperform the broader market by 2X over the next year.
WSO’s Quality (97) is unchanged from a year ago. Growth has declined slightly to 74, but that’s still solid. That means it’s bringing in revenues and maintaining a strong balance sheet to support its stock price.
But I want to focus on Watsco’s Momentum (94) and Volatility (68). Over the last year, WSO has steadily gained 31%, and its “Bullish” rating points to more outperformance from here.
More proof that Green Zone Power Ratings works!
Until next time,
Chad Stone
Managing Editor, Money & Markets
P.S. We’re closing the doors on Adam’s Wealth Multiplier Summit in the coming days. If you want to see Momentum, Value and Quality in action, click here to watch before this offer to join goes away…