AAON Stock: Is it Time to Cool Down on AAON, Inc.?

AAON stockLooking Ahead for AAON Stock

Other tech experts sneer at my interest in companies like AAON, Inc. (NASDAQ:AAON) because they don’t consider AAON stock particularly innovative. The company doesn’t pour money into secretive research, nor do they put on a spectacle at events like the Consumer Electronics Show (CES).

Unlike the bevy of app-based companies in Silicon Valley, firms like AAON don’t push the boundaries of programming or software. But at least they make money.

As far as I’m concerned, there are only a handful of money-losing tech stocks worth owning. The rest are just garbage. I prefer companies that actually generate income, and better still, those which pass profits back to shareholders. AAON fits that description.

The Tulsa, Oklahoma-based company manufactures heating and cooling systems for a broad spectrum of clients. It has 1,676 people on staff, ranging from engineers to salespeople, all of whom help keep the lights on. There are no “tech evangelists” or other made-up positions like you find in Silicon Valley. Only people with specific sets of skills are on the payroll, because this company is focused on profits.

Speaking of which, AAON registered $0.27 of earnings per diluted share last quarter. This reflected a 35% surge from the same period a year before, which shows how much growth is possible even in the dullest of industries. Gross margins jumped two percent, costs remained stable, and the firm continued to be debt-free. How many Silicon Valley startups can match that?

We hear stories about tech startups crumbling under heavy debt loads on a daily basis. Even the most successful tech startups are known to suffer huge losses. For instance, Uber Technologies Inc. famously lost $1.2 billion in six months while trying to conquer the Chinese market. At the end of the day, the company was forced to concede defeat. Uber sold off its China division to a competitor.

Yet if Uber had an initial public offering (IPO) tomorrow, I guarantee you that investors would line up around the block for a chance to own shares in the company. Investors are blinded by “newness”. I, on the other hand, place more faith in profits. So even though management has pared back expectations, I remain bullish on AAON stock.

That being said, I like when profitable companies push the boundaries of technology. For instance, there is one tech startup that generates a ton of cash, and that company has invested some of its cash into a device that could surpass the “iPhone” in terms of popularity. This is truly one of those rare moments in investing; the potential returns are simply astounding! Click here to read more.