In a market that remains more focused on growth than value, strong HVAC names like Carrier (CARR) and Trane (TT) have continued to outperform, though another name I like in the space, Japan's Daikin (OTCPK:DKILY), hasn't done too badly either. Improved prospects for a COVID-19 vaccine haven't dented the air quality angle to the HVAC story, nor have investors moved off of the green retrofit story.
While I like the long-term secular story behind HVAC and Trane, including increased global urbanization, increased focus on energy efficiency and building automation, and air quality, the valuations across the sector do still concern me, and the shares are within 10% of even the most bullish sell-side fair value targets. I continue to like this as a secular/trend call, but the valuation makes it harder to recommend at these levels.
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Trane Has A Head Of Steam On Strong Resi Demand And Multiple Commercial HVAC Drivers
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