A. O. Smith Can Continue Its Outperformance

Jan. 11, 2023 4:33 PM ETA. O. Smith Corporation (AOS)5 Comments
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  • The company generates 80-85% of the residential revenue from the replacement market, which is less cyclical and should limit the downside despite tough macros.
  • The company’s margin should benefit from the moderation in commodity prices, price hikes, and cost-saving actions.
  • The stock is still trading below its historical valuation.
bull and chart for business or bull market trader concept


Investment Thesis

A. O. Smith’s (NYSE:AOS) stock is up over 19% since our last bullish article in September. Over the last couple of quarters, the company has experienced inventory destocking by its channel partners in its residential water heater business

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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article is written by Sanket B.

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