Modine Manufacturing is Monday's IBD Stock Of The Day, as the heating and air conditioning (HVAC) play rallied along with peers Monday, offering investors early entries to an official buy point.
The Wisconsin-based HVAC company is expected to see fiscal 2024 fourth-quarter earnings grow 13% to 76 cents per share even as revenue is forecast to decline 2% to $605 million. Modine should report fiscal fourth-quarter financials in late May. Meanwhile, analysts see full fiscal year profit increasing 66% and continue to grow another 30% by 2026.
Part of this growth is due to the demand surge for artificial intelligence (AI) and the data centers needed to train and deploy machine learning. The high heat generated from these facilities have upped demand for cooling products.
"We are experiencing rapid sales growth to the data center market, supported by robust demand from both hyperscale and collocation customers," Modine Chief Executive Officer Neil Brinker said at the end of the fiscal third quarter in January.
The company saw sales for data center cooling, HVAC and refrigeration products grow more than 30% in fiscal Q3. For the full fiscal year, the company predicts revenue from data centers will grow 60%-70%.
Modine Manufacturing Stock Performance
MOD stock surged 7.2% to 100.92 during market trade on Monday, clearing recent short-term highs. Modine Manufacturing stock is currently basing with an official 106.01 buy point, according to MarketSurge analysis.
Aggressive investors could use Friday's high of 97.92 or 99.47 as early entries for MOD stock.
The 13 stocks in the IBD-tracked Building-A/C & Heating Products industry group have collectively gained 13.7% in 2024, outperforming the S&P 500. The group is 27 out of the IBD-tracked 197 industries for the year.
Last Monday, HVAC stock peer Carrier Global was IBD Stock Of The Day. CARR stock on Monday jumped 3.2% to 64.07, breaking out above a 60.87 buy point.
Meanwhile, Comfort Systems advanced 6.5% to 335.58 Monday, hitting new all-time highs.
Carrier Chief Executive David Gitlin said on the Q1 earnings call in late April that a growth area for the HVAC business is the AI data center market. Artificial intelligence offers "an outsized opportunity for cooling providers, given that AI chips drive seven times the heat generation vs. traditional chips," Gitlin said. He sees the data center HVAC market growing from $7 billion in 2023 to $15 billion-$20 billion in 2027.
MOD stock has a near-perfect 98 Composite Rating. The stock also has a 99 Relative Strength Rating and a 95 EPS Rating.
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