Over the past few weeks much of the U.S. and European populations have shivered in unseasonably cold temperatures causing thermostats to rise and stressing home and commercial heating systems. Investors, in response, have been looking for opportunities to capitalize on such weather extremes by concentrating on manufacturers of heating and air conditioning components, anticipating increased demand for such systems to follow as extreme weather events become more common.
One such company, Modine Manufacturing (NYSE: MOD) provides solutions and components that are used in heating, ventilation, and air conditioning (HVAC) systems. The company’s products range from standalone heaters in small spaces, to components for larger HVAC systems and complete systems that help maintain comfortable indoor temperatures and cooling for data centers. Nearly 60% of the company’s revenue is derived from outside the U.S., which means that in a weak dollar environment like the one we’re in, sales priced in other currencies provide a tail wind when revenue is converted back to USD.
110 year-old Modine is headquartered in Racine, Wisconsin, has a market capitalization of $10.5 billion and, in many ways, may be seen as a poster child for what American Manufacturing used to be and what it might be yet again.
With an almost perfect Sentiment score of 9.8 (out of 10) MOD ranks highest among 3,835 US stocks covered by MarketGrader by this metric. It bears mention that our Sentiment score is composed of four separate indicators (Price Momentum, Price Trend, Relative Strength, and Earnings Guidance), and is designed to help investors gauge short-term demand for a company’s shares.
MOD’s grades for a couple of these indicators are worth highlighting to underscore the strong momentum currently underpinning the stock. In our Price Momentum indicator, MOD gets an A+. This indicator is based on our own proprietary MACD (moving average convergence/divergence) analysis, designed to measure the strength in a stock’s recent price performance relative to its longer-term moving averages. The other is our Price Trend indicator, where MOD also gets an A+. It’s designed to measure the direction and strength of a stock’s price trend in the last 14 days within its home market (U.S.) and its sector (Industrials). It gets As for Relative Strength and Earnings Guidance, rounding out our Sentiment analysis of the stock.
MOD is also included in some of our best lists of ideas, such as Best Momentum stocks, and Improving Earnings Guidance.
MarketGrader generates hundreds of unique ideas like this one every week across global markets. Subscribe to MarketGrader Advanced today for unlimited access.
