Stocks Filtering Out COVID-19

Inadequate air-conditioning systems may be one of the primary catalysts causing an uptick in cases across Southern US states. During these hot summer months, people are spending an increasing number of hours inside in close quarters with air conditioners encouraging this pandemic's spread.

Businesses owners need to adjust to the new normal and preventing the spread of the virus within the boundaries of their operations should be their #1 priority. Many HVAC systems will require new filters and potentially system upgrades to ensure the safety of patrons.

This clean air initiative is apt to give building equipment manufacturers like Trane Technology (TT), Carrier (CARR) (previously owned by United Technologies), and Johnson Controls (JCI) a strong tailwind in the second half of 2020.

My Building Systems Pick

Johnson Control's innovation-driven building systems are "Powering the safe reopening of buildings." This enterprise has the largest portfolio of HVAC systems and controls globally and is the authority in this field. As office buildings, restaurants, and bars begin reopening, many of them will need to improve their HVAC systems and turn to the leader in the space, Johnson Controls.

This enterprise will see an H2 tailwind that should lift JCI shares right back towards their February highs ($42.50). The secular urbanization around the world is going to give this digitally driven smart building systems company a robust growth stage for years to come. Johnson Controls is focused on making buildings safer and more efficient, which will help businesses stay safe and save on utility costs.

Johnson Controls has experienced a short-term headwind related to the pandemic like most equipment manufacturers. Still, the markets haven't priced back in the long-term potential that this company possesses. Its innovation-driven products and services are going to be in high demand over the coming months and years.

We have a robust support level around $32.50 (50% retracement level and 50-day moving average) combined with a cushy 3.06% dividend giving me comfort in purchasing these shares today, despite the recent surge in market volatility.

Legal Speculation

There is speculation that government authorities will start mandating specific air conditioning units/filters in restaurants, bars, and office buildings to prevent the further spread of this disease. If these regulations were to be implemented, it would provide Johnson Controls with a strong wave of new customers in the coming months.

Hospitals around the US have had regulated HVAC systems for years to prevent the spread of any disease within the confines of the building. These regulations could easily be executed in businesses across the nation (with some government subsidies, of course).

The Takeaway

The world is shifting, and it is time to take advantage of some of the less apparent transitions of the new normal.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

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
Trane Technologies plc (TT): Free Stock Analysis Report
Johnson Controls International plc (JCI): Free Stock Analysis Report
Carrier Global Corporation (CARR): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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