Wednesday's IBD 50 Stocks To Watch pick, AAON, is one of the best stocks to buy and watch right now, with company earnings surging 103% in the latest quarter. Last week, AAON stock regained its 10-week line in bullish fashion, constructing the right side of a new base.
Tulsa, Okla.-based AAON manufactures HVAC systems, with product lines including industrial air handling units, chillers, heat and water pumps, rooftop units and pool room dehumidifiers.
AAON reported better-than-expected Q1 2023 earnings and sales on May 4. Earnings have exploded in the last two quarters, with surges of 294% and 103%. Sales are bounding as well, averaging 69% growth over the last three quarters.
Analysts project 49% earnings growth this year, followed by a 17% bump in 2024.
"Our operations team is doing a great job managing the robust demand by increasing production capacity quickly while maintaining solid productivity. Backlog continued to grow," said CEO Gary Fields on the earnings call.
Fields continued, "Despite how successful we've been with adding production capacity, bookings continue to outpace production. The environment for us remains positive. Bookings trends are still on the rise and our channel partners are very optimistic. Thus we maintain a positive outlook for the year."
AAON Earnings Surge
With huge earnings growth in the two most recent quarters, AAON stock shows a 98 out of a perfect 99 Earnings Per Share Rating, according to IBD Stock Checkup. This rating takes into account EPS growth and stability of earnings over the past three years, with the two most recent quarters weighed more heavily.
AAON stock boasts a near-perfect 98 IBD Composite Rating due to strong fundamentals and technicals in recent quarters. The IBD Composite Rating is designed to help investors easily gauge the quality of a stock's fundamental and technical metrics.
AAON ranks No. 2 in IBD's Building-Air Conditioning & Heating Products industry group, one spot behind Comfort Systems. FIX stock is out of buy range beyond a 147.68 double-bottom entry.
HVAC Leader Is One Of Best Stocks To Buy And Watch
On Wednesday, AAON stock slipped 1.8% in midday trading. Still, shares are above their 50-day line after they regained that key level last week. AAON stock is building a cup base with a 104.32 buy point, per IBD MarketSmith chart analysis.
With the stock about 9% away from its latest entry, keep a lookout for a potential handle. That would lower the buy point.
The lagging relative strength line is a flaw. Despite the stock's recent rebound, the RS line remains far from its old highs. That's a key technical indicator to watch. It should hit a new high on the breakout day or shortly thereafter to confirm the stock's market-beating strength. Remember, the RS line measures a stock's price performance vs. the S&P 500 and is the blue line plotted on every IBD chart.
Boasting strong fundamentals in recent quarters, AAON stock is one of the best stocks to buy and watch in today's stock market.
With the stock market in a confirmed uptrend, investors should be on the lookout for top stocks breaking out. Amid Wednesday's mixed stock market action, IBD recommends exposure in stocks at 60% to 80% of your portfolio.
Best Stocks To Buy And Watch
Three recent IBD 50 Stocks To Watch picks, which are among the best stocks to buy and watch.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| Shoals Technologies | 25.00 | Trendline | |
| Ryanair | 108.90 | Tight area | |
| Shift4 Payments | 69.00 | Trendline |
Source: IBD Data As Of June 14
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on the best stocks to buy and watch and the stock market.
