A.O. Smith Shares Popped: What You Need to Know (AOS)

A.O. Smith Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of water heater manufacturer A.O. Smith (NYSE: AOS ) are boiling today, racing to gains as high as 10.8% on many times the average daily trading volume.

So what: This is a two-factor jump as Smith both reported blowout earnings in the second quarter and announced a $418 million buyout of privately held rival Lochinvar. The new lines of water boilers are expected to add $0.10 per share to Smith's earnings next year.

Now what: The company is focusing on water heating with laser-like concentration, including the pending sale of the unrelated electric motors division to Regal Beloit (NYSE: RBC ) . If the concept rings a bell, you may have heard of how Middleby (Nasdaq: MIDD ) dropped everything else to focus exclusively on restaurant-grade cooking surfaces. For Middleby, that bold shift led to an astonishing 2,000% share price gain over five years. Our CAPS community is hoping for similar results for this five-star stock, partly fueled by booming water heater sales in China.

Interested in more info on A.O. Smith? Add it to your watchlist.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is investors writing for investors.

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