🥵Hot Stocks: It’s Getting Hot In Here & So Are These Stocks

With global temperatures increasing, the stock markets are evolving differently. Here are some HOT stocks you should consider for a warmer Earth

Here’s a piece of trivia you may have never even thought of; 8 of the hottest years recorded in history have all come since 2015. And we’re on track for yet another year as an El Niño weather pattern is developing. The last time this happened was 2016, history’s hottest year.

There’s a direct correlation between weather and investment trends, not limited to making you (or your wallet) sweat.

In today’s newsletter, we’ll discuss:

📈What a warming world means for us, and our investment trends

♨️Steamy stocks to look out for as things sizzle up

---

🌡️It’s A Lot More Serious Than Just Extreme Weather

A warming world means everyone will have to deal with hotter temperatures, and everyone knows that. That also means we will look for more ways to stay cool collectively.

It’s a big plus for air-conditioning, ventilation, and heating companies (and any other firms involved in keeping heat away) that will work on innovations and technologies that make our everyday activities less hot and climate-friendly.

Why? These technologies and innovations will create growth opportunities for said companies: because, well, let’s face it– usefulness begets value, and value is growth.

What does the data say?

How are we sure? 3 billion people live in the hottest places on Earth, but only 8% of that number have air conditioning. Another exciting thing is these areas, which include the Middle East and Africa, have had expanding incomes in the last couple of years and increased populations; much faster than the rest of the world.

This data indicates increased demand for HVAC (Heating, Ventilation, and Air Conditioning) products and services. To back this claim up, take Seattle, for example. It was once the least air-conditioned city in the United States, a tag that has since disappeared thanks to recent heat waves. 

There’s also the talk of business entities, individuals and governments contributing to the decarbonisation movement by reducing their footprints. Global efforts have been centred on switching to solar energy, battery storage or heat pumps to make buildings more sustainable. Everyone’s trying to go green!

The sum of all these factors means the HVAC-related market will be ripe with ample opportunities. You certainly should pay attention to these trends– either from an investing standpoint or if you seek to enter as an entrepreneur, just like HVAC startup BlocPower.

---

Hot Stocks for a Hot World

With that said, here are some stocks you should consider betting on:

Johnson Controls International (JCI:NYSE)

JCI is known for providing top-of-the-line tech in security, fire and, of course, HVAC to make buildings safer, less costly and energy-efficient. The company operates a smart building platform (OpenBlue), which has driven double-digit growth in recent years, not to mention the increased demand for its services thanks to decarbonisation trends.

JCI shares are a little on the pricier side of things but are worth looking into if you can afford to.

Carrier Global Corporation (CARR:NYSE)

The primary reason for this recommendation is obvious. This powerhouse operates and leads the North American residential and unitary commercial HVAC market. To add more flavour, the company announced its plans to acquire German industrial firm Viessmann Group, making CARR an even more significant HVAC stakeholder with a bigger footprint in the global community.

CARR shares are currently trading at a price that is 19 times its estimated earnings for the year 2023. This means this company’s hot stocks are priced lower than other companies in the same industry. It’s even cheaper when compared to a wider group of industrial companies.

Hannon Armstrong Sustainable Infrastructure Capital (HASI:NYSE)

While HASI isn’t a provider of HVAC products or services in the way JCI and CARR are, it provides the capital for HVAC companies. Think of it like a fairy godmother but for the HVAC market. And it’s got all the magic to boot, too: HASI earnings per share (the profit they make for each share of stock) have been increasing by an average of 14% yearly for the past three years. 

Additionally, the company has plans to invest more than $5 billion in projects over the next 12 months. However, even with these positive developments, the stock is priced at 11 times the estimated earnings in 2023, making it relatively inexpensive compared to its estimated future earnings.

Other stock options you should take a look at include:

Vertiv

Trane

Lennox International 

---

💡Opportunity In The Face of Mishap

It’s becoming increasingly clear that the world is getting warmer, and we can see evidence of this in the thick smoke that has recently covered areas like New York and the Northeast Corridor.

Unfortunately, scientific evidence suggests that these warming trends are likely to continue. This has significant consequences that will affect our lives, including food production, access to clean water, and severe health concerns.

In addition, the conversation around creating cooler and more energy-efficient workspaces and homes is shifting from being seen as a luxury to becoming a necessity. As a result, there will be a growing demand for products, services, and equipment that can help address this challenge. It would be wise to consider investing in such HOT stocks.