When picking stocks, spotting outperformers is key to growing your portfolio. That's the case with AAON stock, a provider of HVAC systems that has outpaced benchmarks such as the S&P 500.
The stock market remains in an uptrend and leadership appears to be broadening out to industry groups beyond high growth areas such as technology and software. And so AAON has formed a flat base with a buy point of 88.78, according to IBD MarketSurge weekly pattern recognition tools.
The chart shows bullish support as AAON stock approaches its buy point in a base-on-base pattern. Moreover, a breakout could net higher gains since shares are in an early-stage base.
AAON Stock: Double-Digit Sales Growth
Sales growth has ranged from 20% to 87% over the past eight quarters while earnings growth for the HVAC company has been steady as well except for one quarter when it decelerated.
Shares rallied into earnings on Feb. 28 but fell in heavier volume than average for four days before rebounding from the 10-week moving average. Shares then rallied for eight straight days in the base.
Fourth-quarter sales grew 20% to $306.6 million while earnings per share climbed 19% to 56 cents. The company also ended the quarter with a backlog as bookings grew year over year and were more than production.
For 2024, Chief Executive Gary Fields said the company was "cautiously optimistic" as nonresidential construction shows signs of slowing.
Outpacing The S&P 500
AAON provides HVAC equipment for homes, businesses, industrial and data centers and for cleanroom operations. Year to date, AAON stock has risen 19% compared with the S&P 500's gains of 9%.
The stock has a Composite Rating of 98. The EPS Rating of 96 also shows steady earnings while the Relative Strength Rating of 89 is also adequate. Mutual funds own 60% of outstanding shares.
The Columbia Small Cap Growth Fund (CMSCX) and the Lord Abbett Developing Growth Fund (LAGWX) hold shares of AAON stock. Among exchange traded funds, the Invesco S&P Small Cap Industrials ETF has AAON as well.
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