Diversified HVAC manufacturer stocks have improved 69 percent since 2012
Within the HVAC universe, pure-play manufacturers, which include Aaon Heating and Cooling Products, Lennox Intl. Inc, Mestek Inc., and Nortek Global HVAC, have led the market since January 2012 with a cumulative return of 196 percent. HVAC service and distribution and diversified HVAC manufacturer stocks have also performed well, gaining 90 percent and 69 percent, respectively, outperforming the S&P 500 with a gain of 62 percent over the same period.
As the economy continues to strengthen, the U.S. market for commercial and residential HVAC systems is expected to continue to expand. According to a study conducted by the Freedonia Group, U.S. demand for HVAC equipment is expected to hit $17 billion by the end of the year. Leading indicators for the HVAC industry, including the U.S. private and public construction markets, are poised to expand as interest rates remain low and the economy continues to improve. The building construction market is forecast to grow at a compound annual growth rate (CAGR) of 9 percent through 2019, according to a study conducted by First Research. Another expected driver for growth in the HVAC market is pent-up demand, as companies had halted investment in newer, more efficient systems in anticipation of greater economic stability, which has continued to come to fruition.