Inspiration struck on a foggy train platform in 1902.
Willis Carrier was fresh out of college and working on a difficult problem: how to control humidity in a printing press.
The moisture in the air was causing pages to come out blurry for the Sackett-Wilhelms Lithographing and Publishing Company.
When warm, moist air is cooled down, it releases water in tiny droplets. These turn into fog.
Carrier realized he could use the same effect to solve his humidity problem. Cooling the air would get rid of the water.
So he created the first air conditioner by using a fan to blow air over tubes filled with cold water.
It solved the problem for the printing company. But an unexpected side effect was that workers in the plant felt a lot more comfortable with the lower humidity.
Soon movie theaters were installing air conditioners to keep their customers comfortable. Eventually advances in technology made them cheap enough to install in houses.
Air conditioning is now a common luxury in many homes. But many people still don’t own an air conditioner.
And they’re starting to realize why they might want one…
Today I want to show you why demand for air conditioning could continue increasing in the coming years.
I’ll also give you the name of one company that could profit from this trend.
We Need Cooler Days
In the first week of July this year, the National Oceanic and Atmospheric Administration collected a frightening piece of data. It found that the global average temperature set a record high.
Scientists warn that more records could be broken in the coming months.
“Cooling degree days” are a measure of how much energy is needed to cool buildings.
The Energy Information Administration says the average cooling degree days in the U.S. have gone up by more than 40% since the 1950s.
As it gets hotter, more people are likely to decide that they need an air conditioner.
In California, only 72% of homes have an air conditioner. In Washington, just 53% of homes have one.
In southern states such as Texas and Florida, 95% of homes have an air conditioner. But these are also some of the fastest-growing states. As more people move to these places, more homes with air conditioning will be needed.
The Inflation Reduction Act also includes tax credits that encourage people to buy more energy-efficient air conditioners. That means it’s easier for people to afford to replace their older air conditioning units with newer ones that use less electricity.
And it’s not just homeowners demanding more air conditioning.
A/C’s Most Critical Need Yet
Many data centers are being built to address the growing demand for cloud computing and artificial intelligence.
And data centers need large amounts of air conditioning to remove the heat created by running thousands of computer chips.
One air conditioning manufacturer that could profit from the increasing demand for air conditioning is Carrier Global Corp. (CARR).
Carrier traces its history back to the company that Willis Carrier started. But for many years, it was a business owned by United Technologies.
Several years ago Carrier was spun off into a separate company. Since then it has increased its dividend every year and currently yields 1.5%.
Carrier has returned 39.1% over the past year compared to 14.7% for the S&P 500.
And it still has the potential for market-beating returns. Carrier trades at 19.2x earnings while other air conditioner manufacturers trade for over 21x earnings.
It has been more than 120 years since the air conditioner was first invented. But the demand for air conditioning continues to grow. And the manufacturers like Carrier are rewarding investors with growing dividends.
And there’s an even better way to profit from the increasing amount of air conditioning that’s being installed.
Air conditioners use 10% of all the electricity that’s produced today. That’s only going to increase as more air conditioners are used.
Right now, we’re on the cusp of a new era in the energy sector. I’ve been following it closely for years. And I released a presentation recently to bring you what my research has uncovered.
In it I tell you all about my No. 1 energy play for 2023 and beyond. As energy demands continue to rise, there are some roadblocks ahead no one is accounting for.
By preparing yourself early, you could get a piece of the company solving this massive problem. Make sure to watch this urgent briefing here.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily