$CARR - A Good Choice for Any Climate
Welcome to my September Stock Idea! I bounced around a few options, but ended up choosing Carrier Global, $CARR. $CARR is one of my longest held positions and I currently hold it in both my Taxable Brokerage and Roth IRA.

I will hit a few key points about the company, why I invest currently, and what future prospects are for the company that continues to make $CARR a strong investment.

What is Carrier?
Carrier is a "Global leader in healthy, safe, sustainable and intelligent building and cold chain solutions". So what does this mean? Carrier's bread and butter is their HVAC (Heating, ventilation and air conditioning) equipment. Carrier equipment regulates and maintains the climate in your home & workplace through your air conditioner and furnace. Additionally, Carrier provides cooling solutions for industrial applications such as cooling towers, chiller units and refer cars to maintain temperatures in manufacturing processes and transportation. Carrier is the #1 industry leader in the following categories:

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Why do I Currently Invest?
As I said above, Carrier is one of my core positions. I started my position in Carrier shortly after they re-listed on the public markets in 2020. I was drawn to Carrier initially by the undervalued share price in the company, compared to what I thought the value was, as well as the dividend.

Working in manufacturing, I was aware of the far reaches of the Carrier name as a provider for chiller units in my facility as well as many HVAC units in homes. It was a company I understood, interacted with, and saw the scope and stability of the business. My trades are currently linking to Commonstock, but you can see how much $CARR makes up my portfolio below:

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I have been handsomely rewarded for holding $CARR for nearly 3 years. Share price of my initial investment has grown by over 180%, and is outpacing the S&P 500 by 100% in that time. $CARR is the #1 listing in the S&P Industrials sector since spin-off.

Additionally, the dividends have been steadily rolling in, and growing. In just the past two years, dividend payout has tripled from $0.16 per share in 2020 to $0.48 per share in 2021. One of the 4 capital deployment strategies in Carrier's Investor Day Presentation is to continue to grow the dividend, so I expect this trend to continue.

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Why Will I Continue to Invest?
There are many tailwinds that will continue to support and propel Carrier's business in the years to come. There are two things that come to mind - sustainability and technology.

As the world goes green, so is Carrier. HVAC, especially cooling, is a highly energy intensive process. Huge investments are being made to drive towards a greener future, and Carrier is able to capitalize on these investments by offering less energy intensive products. $CARR is projecting a 9% CAGR in green infrastructure investments in the next few years. Carrier already has its vision for Sustainable Buildings, and the market opportunity for this transformation.

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Not only does Carrier have the roadmap, but they also have the products to back it up and make the transformation happen:

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Climate and environment control go hand in hand with innovation in healthcare, technology and manufacturing.

In research labs where healthcare advances are being developed, clean, controlled environments are required to ensure a sterile environment.

As technology, especially information technology, advances, cooling switch rooms, server rooms, and other applications is critical to ensure equipment functions properly.

Finally, as manufacturing advances and manufacturing processes become more temperature dependent, Carrier will be essential. Cooling reactors, raw materials, tanks, finished goods, all require cooling via chillers and cooling towers that Carrier provides

In summary, Carrier is a global leader in industrial and residential HVAC and cooling applications. $CARR has provided great share price appreciation as well as a growing dividend since its spinoff in 2020. Finally, Carrier has many tailwinds as the globe transitions to green alternatives and the need for climate control and cooling continues to increase.

What are your thoughts? Do you invest in $CARR. Are you thinking of adding to your watchlist?

Link to full Investor Day Presentation:
The Hippie Investor's avatar
Good stuff. Currently on my watchlist bc I haven’t done enough research on it yet, but I like what I know of them and I’m bullish on the companies that are going to make housing and buildings more energy efficient especially when it comes to heating and cooling. Currently invested in AOS and JCI. My one concern with CARR is HVAC is a bit commoditized, (lots of suppliers/not a lot of differentiation), and cyclical, but I think you make a good case as to why CARR could be the most investable leader in the space. The other company I’m considering is $TT Trane.
Scoreboard Investor's avatar
@the_hippie_investor thanks for the feedback. I haven’t looked into many other HVAC companies since $CARR was an early position and I focused on diversifying elsewhere. Would like to hear your thoughts on $TT
The Hippie Investor's avatar
@scorebdinvestor I’ve only looked into them briefly but intrigued by their diversity of products. When looking into HVAC they came up as a quality company. Good balance sheet and margins. Very aware of using technology to be more energy efficient and sustainable. Their other big business is cold car transport refrigeration. Not something I know much about but not a lot of competition in that niche was my impression. And there’s an obvious need for it from a food supply chain perspective. It’s one of those energy intensive things that can really benefit from a company like Trane making it more energy efficient.
Nathan Worden's avatar
Strategically speaking, Carrier going green is a great move for them. I was surprised to see the operational savings of the green products they have.

I'm also impressed by the tripling of the dividend since 2020 👀
Scoreboard Investor's avatar
@nathanworden yeah, definitely a double benefit going green. More efficient means better for the environment and your wallet
Conor Mac's avatar
The fact this has outpaced the S&P 500 by such a wide margin over your holding period goes to show that sometimes boring is best :)

Great write up SB!
Conor's avatar
Very well written! I learned a lot about carriers
Scoreboard Investor's avatar
@conorvalue thank you, sir. Glad you learned something from it!
Joshua Simka's avatar
Do you see any implications for $CARR's industrial business with the remote work trend and communal office exodus? I LOVE the sustainability initiatives! 🌎
Scoreboard Investor's avatar
@tomato potentially. I do think that volume can be replaced with hospitals, nursing homes, and manufacturing facilities - which are going more climate controlled and increasing in number
Stock Metal Investment's avatar
I looked into $CARR during my research into $WSO. I like Watsco more, because it doesn't rely on any single manufacturer. I recently invested in the company, for similar reasons you have listed here: HVAC has great industry tailwinds(climate change helps the industry and relentless drive for greener products helps as well). Great industry to be in, but I prefer to own the distributor. CARR and WSO have a close relationship though, with CARR being the largest HVAC manfacturer and accounting for the bulk of WSO revenue. So I hope everything goes well for them as well :)
Scoreboard Investor's avatar
@stonkmetal owning the distributor is a good decision! Never thought to look into the distributor. Hopefully the tailwinds do prove to be beneficial for both $CARR and $WSO!
Stock Metal Investment's avatar
@scorebdinvestor If you want to, I published a piece on Watsco yesterday on seeking alpha! Also always happy to discuss further in DMs if you wanna look deeper into it.
Sagar Vensi's avatar
Thanks for this. I got to learn a lot.
Scoreboard Investor's avatar
@stockado glad you enjoyed!
Sagar Vensi's avatar
It was really good. Let me know what you think about my write up.