3 Stocks in Focus From the Thriving Air Conditioner & Heating Industry

Industry Overview - The Zacks Building Products - Air Conditioner & Heating industry is positioned to benefit from energy transition trends and the pro-environmental movement, with increasing demand for renewable energy solutions expected to drive expansion opportunities [1] - Key players like Comfort Systems USA, AAON, and The AZEK Company are thriving by providing essential maintenance and repair services while managing costs effectively [1][3] Industry Description - The industry includes designers, manufacturers, and marketers of products for heating, ventilation, air conditioning, and refrigeration, covering a wide range of equipment and materials [2] Trends Shaping the Industry - Pro-environmental initiatives by the U.S. administration focus on reducing greenhouse gas emissions, benefiting companies that provide clean energy systems [3] - Investments in technology and e-commerce are crucial for enhancing customer experience and expanding market reach, with companies pursuing acquisitions to grow their product offerings [4] - Rising costs and regulatory pressures related to energy efficiency and emissions are challenges faced by the industry [5] Industry Performance - The Zacks Building Products - Air Conditioner & Heating industry ranks 52, placing it in the top 21% of over 250 Zacks industries, indicating positive near-term prospects [6][7] - The industry has outperformed the broader Zacks Construction sector and the S&P 500, gaining 46.8% over the past year compared to 20.1% and 27.7% respectively [8] Valuation Metrics - The industry currently trades at a forward P/E ratio of 32.7X, significantly higher than the S&P 500's 21.7X and the sector's 16X [9] Company Highlights - AAON: Focuses on air conditioning and heating equipment, with a strong pipeline in the data center market and a commitment to expanding production capacity. The stock has gained 37.2% over the past year, with a 2024 earnings estimate of $2.24 per share [12][13] - Comfort Systems USA: A national provider of HVAC services, benefiting from high demand and a strong project backlog. The stock has gained 85.2% over the past year, with expected earnings growth of 36.2% in 2024 [14][15] - The AZEK Company: Manufactures sustainable outdoor living products, showing robust growth driven by innovation and market demand. The stock has gained 39.8% over the past year, with a fiscal 2024 earnings estimate of $1.19 per share [17][18]