Here's How Much You'd Have If You Invested $1000 in Watsco a Decade Ago
How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Watsco (WSO) ten years ago? It may not have been easy to hold on to WSO for all that time, but if you did, how much would your investment be worth today?
Watsco's Business In-Depth
With that in mind, let's take a look at Watsco's main business drivers.
Incorporated in Florida in 1956, Watsco is the largest distributor of Heating, ventilation and air conditioning equipment, as well as related parts and supplies (HVAC/R) in North America. It distributes residential and commercial air conditioners; parts such as replacement compressors, evaporator coils and motors; as well as supplies such as thermostats, insulation materials, refrigerants, grills, registers, sheet metal, tools, concrete pads, tape, and adhesives. Its air conditioning and heating equipment is sold to the residential replacement market, the commercial market and residential new construction market.
Watsco distributes products in more than 671 locations (as of Dec 31, 2021) in the United States, Canada, Mexico and Puerto Rico, and on an export basis to Latin America and the Caribbean. Of these, no single location accounts for more than 3% of total revenues. The company sources supply from main industry players including Rheem, Carrier, Nordyne, Goodman, Trane, and Lennox.
Revenues as disaggregated by the company per major product lines within single reporting segment are as follows:
HVAC equipment contributed 69% to 2021 revenues, Other HVAC products accounted for 27% and Commercial refrigeration products constituted 4%.
On Feb 10, 2022, the company raised annual dividend by 13% to $8.80 per share, to be reflected from April 2022. On May 11, 2021, Watsco acquired Acme Refrigeration. Acme is a major distributor of air conditioning, heating and refrigeration products in Baton Rouge, LA, and provides nearly 7,000 SKUs to more than 4,000 active customers across 18 locations in Louisiana and Mississippi.
Bottom Line
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Watsco ten years ago, you're probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in July 2012 would be worth $3,193.06, or a 219.31% gain, as of July 15, 2022. Investors should keep in mind that this return excludes dividends but includes price appreciation.
In comparison, the S&P 500 gained 179.37% and the price of gold went up 3.37% over the same time frame.
Looking ahead, analysts are expecting more upside for WSO.
Shares of Watsco have outperformed the industry in the year-to-date period. The trend is likely to continue, given strength in the e-commerce business. The company is aggressively leveraging technology platforms to better serve and protect customers, as well as employees. Moreover, the company has been adjusting business per the needs of customers, reducing costs in affected markets and improving efficiency. Earnings estimates for 2022 have been trending upward, depicting analysts’ optimism regarding its bottom-line growth potential. Although inflationary pressure, supply chain disruptions and increased costs are concerns, accretive acquisitions and focuses on enhancing shareholder value are positives.
The stock is up 9.27% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 1 higher, for fiscal 2022. The consensus estimate has moved up as well.
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