Displaying items by tag: HVAC

(New York)

Anyone paying attention will have noticed there has been a change in linguistics surrounding the global climate situation in recent years. What was once called “global warming” is now referred to as “climate change”. However, we think that fact has helped to obscure perhaps the best way to play the changing environment. The world has been getting warmer (whether you think it is human created or not), so what better way to invest in the transformation than in air conditioning companies. HVAC companies, such as Ingersoll-Rand and United Technologies, are also good recession hedges. The companies earn the bulk of their revenue from servicing and repairs, businesses which hold up well even in recession because nobody wants to live without air conditioning.

FINSUM: We see this as a good long-term play with nice short-term downside protection. Asymmetric risk on this idea, heavily skewed to the upside.

(New York)

Housing stocks are in a real slump right now. Many homebuilders are in a full bear market following months of slowing home sales and new construction. For instance, the iShares U.S. Home Construction ETF is down 26% this year. That said, take a look at two stocks that seem like they have strong upside—Ingersoll-Rand (IR) and Lennox International (LII). Both companies are in the HVAC sector of housing, which is a strong niche.

FINSUM: What is so strong about the air conditioning and heating (HVAC) sector is that it is at the start of a big replacement cycle. These machines typically last 12 to 15 years, so there is an ongoing boom in replacement of the huge amounts of these systems installed in the 2003 to 2006 housing surge.