Carrier Global is Friday's IBD Stock Of The Day, as the heating and air conditioning (HVAC) play rallied to new highs and is trading slightly above an official buy point.
Carrier, a 2020 spinoff of the now-dismembered United Technologies, is undergoing rapid change. In April 2023, Carrier announced a $13 billion deal to buy Viessmann Climate Solutions of Germany, whose heat pumps and solar and battery technologies make it a key player in Europe's energy transition. Meanwhile, Carrier has been selling off noncore businesses.
Carrier agreed in March to sell its industrial fire business for $1.425 billion. In December, Honeywell agreed to buy Carrier's Global Access Solutions business for $4.95 billion.
In late July, the company reported better-than expected Q2 earnings per share, with profit growing 10% vs. a year ago. Carrier Global projects full-year EPS of $2.80 to $2.90, which would represent around 2%-6% profit growth vs. $2.73 per share in 2023.
AI And Data Centers Offer Opportunity
Chief Financial Officer Patrick Goris said on the Q2 earnings call that globally commercial HVAC orders grew 20% as the company "booked large data center orders in all regions, positioning us for continued strong commercial HVAC growth."
Carrier is starting to be an AI-adjacent play. That's a relatively small part of the business but a key potential growth area.
Carrier Chief Executive David Gitlin added that the company is "very enthusiastic about the data center opportunity."
"We had a big order in Q2," Gitlin said on the recent earnings call. "We are in discussions with the other hyperscalers."
Top hyperscalers — the largest cloud, data center and AI providers — include Amazon.com's AWS, Microsoft, Meta and Alphabet.
Gitlin said on the Q1 earnings call in late April that a growth area for the HVAC business is the AI data center market. Artificial intelligence offers "an outsized opportunity for cooling providers, given that AI chips drive seven times the heat generation vs. traditional chips," Gitlin said.
He sees the data-center HVAC market growing from $7 billion in 2023 to $15 billion to $20 billion in 2027.
Carrier Global Stock Performance
CARR stock gained 2.4% to 71.24 during market trade on Friday, trading slightly above an official 70.09 buy point from a flat-base pattern, according to MarketSurge analysis. Carrier Global stock's relative strength line is at 11-month highs.
The stock is up more than 4% in August, part of a 24% gain in 2024. On Aug. 5, CARR hit a recent low of 61.21 but has rallied back 16% since then.
The 13 stocks in the IBD-tracked Building-A/C & Heating Products industry group have collectively gained 27.4% in 2024, outperforming the S&P 500. The group is ranked 24th out of the 197 IBD-tracked industries for the year.
That group includes AAON, Comfort Systems, Lennox International and Modine Manufacturing. AAON stock cleared a buy point Friday.
Carrier Global stock has a 91 Composite Rating. The stock also has an 86 Relative Strength Rating and an 80 EPS Rating.
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