10 Benjamin Graham Stocks for Defensive Investors

8. Watsco, Inc. (NSYE:WSO)

Number of Hedge Fund Holders: 33

Watsco, Inc. (NYSE:WSO) is North America’s largest HVAC/R (air conditioning, heating, and refrigeration) distributor, operating 690 locations across the US, Canada, Mexico, and Puerto Rico. Serving over 130,000 contractors, it grew revenues from $64.1 million in 1989 to $7.6 billion in 2024 through acquisitions and product expansion. The HVAC/R industry is large and fragmented, driven by a growing replacement market and demand for energy-efficient systems. Watsco, Inc. (NYSE:WSO) also distributes parts for commercial refrigeration and partners with leading manufacturers in both sectors.

Watsco, Inc. (NYSE:WSO) delivered solid Q1 2025 results, highlighted by a 10% increase in HVAC replacement sales and improved gross margins due to favorable product mix and pricing.  Watsco increased its annual dividend by 11% to $12 per share, suggesting the company’s confidence in navigating a potential recession. While international sales remain a minor portion, Watsco continues to navigate tariff uncertainty with agility, leveraging scale and partnerships for long-term growth. The company is transitioning to A2L refrigerant systems, which will impact over half of its sales, supported by $1 billion in inventory conversion and customer training. The company noted Q1 softness was due in part to the A2L refrigerant transition and weak commercial and international sales. However, 454B adoption is accelerating, now over 60% of new sales. Inventory shortages of A2L refrigerant are limited to container issues, not product availability.