Here's Why You Should Retain Watsco Stock in Your Portfolio Now

Watsco, Inc. WSO is benefiting from strong residential demand and higher commercial equipment sales. The company’s growth is supported by consistent investments in technology and strategic acquisitions. Its e-commerce and digital sales platform is also contributing to performance. However, increased costs and expenses are a concern.Shares of Watsco have risen 5.5% in the past three months against the Zacks Building Products - Air Conditioner and Heating industry’s 7.7% decline. WSO also fared better than the broader Construction sector and the S&P 500 index, which declined 8.9% and 5.8%, respectively, during the same period.The Zacks Consensus Estimate for this Zacks Rank #3 (Hold) company's 2025 earnings has increased to $14.60 per share from $14.50 in the past 30 days, solidifying the growth trend.Image Source: Zacks Investment ResearchLet us discuss the factors that highlight why investors should retain the stock now.Growth Catalysts for WSO StockSolid Residential and Commercial Demand: Watsco delivered solid sales growth in the fourth quarter of 2024, driven by strong demand for residential HVAC equipment and steady performance in commercial sales. In the quarter, residential equipment sales increased 16% year over year. Commercial equipment sales rose 9% year over year, reflecting steady demand. This upside was supported by strong unit growth, new customer acquisitions and market share gains. Pricing strategies, product mix improvements and e-commerce expansion further drove this growth.Technology Investment: Watsco is enhancing its digital capabilities to improve customer experience, efficiency and operational speed. The company has the industry's largest database of digitized product information, with over 930,000 SKUs used by more than 375,000 technical contractors and technicians annually through the Product Information Management database. Its HVAC Pro+ Mobile apps provide real-time access to critical information, helping customers work faster and more efficiently. The authenticated user community grew 15% in the 12 months ending Dec. 31, 2024, reaching approximately 64,000 users.Strengthening E-Commerce and Digital Platforms: Watsco is experiencing strong growth in e-commerce and digital sales, driven by increasing adoption of its technology platforms and a rising number of active users. E-commerce sales accounted for 35% of total sales in 2024, increasing 8% year over year. Annualized e-commerce revenues exceeded $2.6 billion, with active users growing faster than non-users. The company’s diverse product range and strong brand portfolio provide a competitive edge, helping it expand market share and improve margins.The company's digital sales platform for HVAC/R contractors, along with its companion financing platform, OnCallAir, generated $1.5 billion in gross merchandise value in 2024, up 25% year over year. Quote volume increased 22% to approximately 313,000 households by year-end. More contractors are adopting Watsco’s technology platforms and ongoing updates are expected to support the transition to low GWP A2L systems, aligning with federal regulations and creating growth opportunities.Concerns for WatscoWatsco has been affected by persisting fixed cost inflation headwind. An increase in variable operating expenses such as freight and delivery costs, temporary labor and fixed costs (like rent) are potential headwinds. Also, it has incurred incremental costs to serve customers, including higher personnel costs and other operational increases. In 2024, the gross margin contracted 60 basis points year over year to 26.8%, due to the impact of pricing and sales mix for HVAC equipment.Key PicksHere are some better-ranked stocks from the Construction sector.Sterling Infrastructure, Inc. STRL currently sports a Zacks Rank of 1 (Strong Buy). STRL delivered a trailing four-quarter earnings surprise of 16.2%, on average. The stock has lost 28.1% year to date (YTD). You can see the complete list of today’s Zacks #1 Rank stocks here.The consensus estimate for STRL’s 2025 sales indicates a decrease of 4.1% and an increase of 20.5% for earnings per share (EPS), respectively, from a year ago.Gibraltar Industries, Inc. ROCK currently carries a Zacks Rank #2 (Buy). ROCK delivered a trailing four-quarter earnings surprise of 1.8%, on average. The stock has gained 10.8% YTD.The Zacks Consensus Estimate for ROCK’s 2025 sales and EPS indicates an increase of 9.8% and 15.5%, respectively, from a year ago.Janus International Group JBI currently carries a Zacks Rank #2. JBI surpassed earnings estimates in two of the trailing four quarters and missed on other two occasions, with the average surprise being 12%. The stock has gained 11.8% YTD.The Zacks Consensus Estimate for JBI’s 2025 sales and EPS indicates a decrease of 9.3% and 15.8%, respectively, from a year ago.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Watsco, Inc. (WSO): Free Stock Analysis Report Gibraltar Industries, Inc. (ROCK): Free Stock Analysis Report Sterling Infrastructure, Inc. (STRL): Free Stock Analysis Report Janus International Group, Inc. (JBI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks