A. O. Smith Corp (NYSE:AOS)

P/E Ratio under 10 makes this stock extremely cheap at the price and it's over both its' 50 and 200 day SMA's.

12/11

Smith has planned out its future in a promising way for investors. Regular dividends become mor eand more attractive while overseas production and markets assist growth.

Undervalued play on China's need for water heater and filtration products

It is in the XHB etf

S&P 5 star

Their price today is near their 52-week high (I actually started tracking this a few of years ago when they were just below $40) but I still think it's a good buy. AOS is a solid midwestern company that has consistently raised dividends for almost two decades and did so recently because of all the cash on hand. Like many companies, it had a stellar recent quarter and yet it's P/E is only around 16 which is much lower than its peers.

Although the market is low in North America because new housing starts are low, I think replacement water heaters will still be needed in older homes (anecdote: we purchased a water heater recently). They're getting into tankless water heaters and I think there's a lot of potential in that market. Today's tankless heaters might not be optimal for all, but there such an obvious way to save energy that I think improvements in their design will mean that this is the basis for all future water heaters; it just doesn't make sense to keep 80 gallons of water steaming all the time.

They're developing a market in China and India and there's obviously tremendous growth opportunities for this industry both in terms of new housing and water purification. The latter products will be selling throughout Asia. Although it remains to see if AOS can establish a "moat" in Asia, their quality products will serve them well.

Products
International Growth
Earnings

As the world searches for new forms of energy, companies like A.O. Smith will be the ahead of the curve in terms of innovation.

Ready for a move up

Recommended by Jim Jubak.

long term

Testing a portfolio of companies that start with the letter "A".

Hit a January low. Has done well in the past. No reason to believe it won't rebound. Most analysts target it for at least $39+

Strong fundamentals, and strongly positioned to take advantage of developing markets.

since 1874. solid, but slow--no irrational exuberance here. milwaukee, where all the $ is farther than right wing! water heaters and small electric motors= china.

Growth and Return Ratios show current pricing is a good value. In addition, the chart shows a nice base for expansion.

has a water-heater business in China that grew by 36% in the first quarter of 2007. The stock is one way to play China's real estate and home construction boom.

housing sector slow in US but now supplying to China's housing needs