Wednesday's IBD 50 Stocks To Watch pick, AAON, is one of the best stocks to buy and watch right now, with company earnings surging in recent quarters. In mid-December, AAON stock broke out past an official buy point and remains in buy range.
Tulsa, Okla.-based AAON manufactures heating, ventilation and air conditioning, or HVAC systems. Its product lines include industrial air handling units, chillers, heat and water pumps, rooftop units and pool room dehumidifiers.
AAON reported better-than-expected results for the third quarter on Nov. 6. Earnings have exploded in the last two quarters, with surges of 155% and 88%. Sales are surging as well, and are averaging 37% growth over the last three quarters. The latest quarter's 29% rise was the slowest since 2021.
Analysts project 73% earnings growth this year, followed by a 8% rise in 2024.
"Our operations team continues to do a great job at efficiently increasing production capacity to manage the robust demand. Production outpaced bookings for a second straight quarter, which we were very happy to see," Chief Executive Gary Fields said on the company's third-quarter earnings call.
Fields went on to say: "From a high-level perspective, industry trends remain favorable for AAON. The high-quality, high-performing custom equipment we manufacture has become a very compelling value proposition with a market that is increasingly focused on decarbonization, energy efficiency and electrification."
AAON Earnings Surge
With huge earnings growth in the two most recent quarters, AAON stock shows a 98 out of a best-possible 99 Earnings Per Share Rating, according to IBD Stock Checkup. This rating takes into account per-share earnings growth and stability of those profits over the past three years, with the two most recent quarters weighed more heavily.
AAON stock boasts an ideal 99 IBD Composite Rating due to strong long-term fundamentals, along with solid price performance since late October. The IBD Composite Rating is designed to help investors easily gauge the quality of a stock's fundamental and technical metrics.
AAON shares the No. 1 spot in IBD's Building-Air Conditioning & Heating Products industry group, with Comfort Systems. FIX stock is falling back into buy range past a 191.27 cup-with-handle entry.
HVAC Leader Is One Of Best Stocks To Buy And Watch
On Wednesday, AAON stock pared losses to about 1% in midday trading. Shares are in the 5% buy range past a cup base's 71.40 buy point, per IBD MarketSmith chart analysis., following a Dec. 14 breakout. The 5% buy zone goes up to 74.97.
Meanwhile, the relative strength line is at its highest level since May, which is a positive sign amid the recent weakness in technology stocks. Remember, the RS line measures a stock's price performance vs. the S&P 500 and is the blue line plotted on every IBD chart.
Boasting strong fundamentals in recent quarters, AAON stock is one of the best stocks to buy and watch in today's stock market.
Best Stocks To Buy And Watch
Three recent IBD 50 Growth Stocks To Watch picks are among the best stocks to buy and watch, along with AAON stock.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| Royal Caribbean | 112.95 | Cup base | |
| Snowflake | 192.66 | Cup with handle | |
| Microsoft | 366.78 | Cup base |
Source: IBD Data As Of Jan. 3, 2024
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on the best stocks to buy and watch and the stock market.
