1. The Move
AAON Inc. entered the NASDAQ in January 1991 and fell 50% over the next six months to a split-adjusted low of $0.05. Since then, AAON has been one of only 39 one-thousand-baggers in my study:
It is one of those long-term winners with not many severe drawdowns, not even in 2008.
2. Business Description
AAON is engaged in the engineering, manufacturing, marketing, and sale of semi-custom heating, ventilation, and air conditioning equipment (HVAC) for commercial use. AAON is a world leader in creating comfortable and healthy indoor environments, efficiently, through the manufacture of premium HVAC equipment.
3. Fundamental Situation at the Bottom
4. Fundamental Situation at the Top
5. Brief Story
AAON was more than a one-thousand-bagger due to a combination of two factors: Revenue and Earnings growth and going from deeply undervalued to very overvalued.
Revenue increased by 17 times (10.7% CAGR), and Net Income increased by 133 times (19.1% CAGR). At the same time, the sales multiple expanded from just 0.1 in 1991 to 6 in 2019, and the earnings multiple increased from 7 to 53.
AAON is the classical long-term multi-bagger, benefiting from strong earnings growth and multiple expansion.