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Climate Control Stocks

Written By Brian Hicks

Posted June 9, 2008

NEW YORK, NEW YORK: Wall Street’s gone cold, but New York feels like a furnace.

Major market averages in the U.S. iced over Friday and Monday as unemployment, oil prices, and yet more sub-prime fallout hit investor confidence.

Meanwhile, temperatures jumped to nearly 100 degrees Fahrenheit in much of the Northeast.

Today, let’s look at how you can beat the heat and beat the Street at the same time with climate control stocks.

Cooling off Consumption

We Americans are as addicted to climate control as we are to oil.

But even though both of those dependencies are hard habits to kick, soaring energy prices mean consumers are at scrambling for new, cheaper ways to get their fix.

The government wants you to dial down your consumption too…

That’s why the U.S. Department of Energy and Environmental Protection Agency launched the Energy Star program to highlight simple changes in managing home energy use.

Buying a programmable thermostat that lets your residence heat up a little more while you’re gone and cools it down by the time you get home can save you a ton.

Energy Star says you can expect a drop of around $180 a year in bills—that’s nearly 20% of the total $1000 the average American household puts towards heating and cooling in 12 months.

It’s not just about savings, though.

Since Energy Star gives its official seal of approval to certain devices, the companies that make leading technology for programmable thermostats, efficient washers and dryers, and a litany of other devices, stand to gain big in the new energy economy.

Climate Control Stocks

Tops among the companies whose devices Energy Star recommends is Honeywell International (NYSE:HON), the world’s leading producer of thermostats.

Honeywell has been around since 1885 after its founder created the "damper flapper," an ancestor to the modern thermostat system that regulated airflow from furnaces once a certain temperature was reached.

Now, Honeywell’s engineering prowess has diversified into aerospace applications, and you can find Honeywell products all over the world.

You can also find Honeywell’s share price all over the chart.

Honeywell International

The company has traded like the tides, surging and then retreating between $54 and $62 per share for most of the past year. It’s been dizzying for long-term investors, but the good news right now for market watchers is that we’re at a cyclical trough.

If Honeywell stays true to form, you could easily ride a 15% upswing in Honeywell in just the next eight weeks or so.

But since Honeywell is less of a pure thermostat play than it used to be, let’s turn our eyes across the pond to the United Kingdom.

A Hot Stock Keeping the U.K. Cool

That’s where we find Invensys, which is near the top of the Energy Star recommendation list and also the leader in indoor climate plays from a stock performance standpoint…

Invensys plc (LON:ISYS) has seen a share price gain of over 25% in the past half-year.

In fact, London-based Invensys is about to join the FTSE 100 list of British firms with the largest market caps.

This is a certified international blue chip whose base is energy efficiency and the booming market for cost-cutting products.

What’s more, Invensys may have a leg up in many emerging markets that are now kicking their cooling systems into high gear—Singapore and Dubai are said to be the planet’s top A/C addicts in the 21st century.

If you’re already trading international stocks with an online broker like E-Trade or a traditional brokerage like Euro Pacific Capital, Invensys is your best long-term bet on the household efficiency trend while temperatures climb around the globe.

Stay cool,

Sam Hopkins

P.S. If you’re not trading in London or Paris, don’t worry—there are countless American Depositary Receipts right on Wall Street that let you tap international market potential without changing currency or opening new accounts. Global Growth Stocks subscribers know how lucrative ADRs are… double- and triple-digit gains have become the norm for our portfolio. To learn more, check out GGS and go global today!