These Climate Solutions Stocks Have Turned Up the Heat in 2024. Can Their Rally Continue, or Will They Cool Off in 2025?

Industry Overview - Demand for HVAC systems increased significantly in 2024, driving strong growth for companies like Lennox and Trane Technologies [1] - Lennox's stock rose over 40% and Trane Technologies' stock surged over 55%, outperforming the S&P 500's 25% rise [1] Lennox Performance and Outlook - Lennox's core revenue grew 15% in Q3 2024 to $1.5 billion, with 2$5.4 billion, with adjusted earnings per share surging 21% [4] - The company reported strong bookings of $5.2 billion in Q3, a 5$7.2 billion, up from $6.9 billion at the end of 2023, with a strong project pipeline, especially for commercial HVAC solutions [9] - The company expects 2025 to be another strong year, driven by demand for sustainable solutions and commercial HVAC systems [9] Financial Metrics and Valuations - Lennox's home comfort solutions revenue rose 15$1 billion, and building climate solutions revenue increased 15% to $465 million [7] - Trane Technologies' adjusted earnings per share soared 24%, and free cash flow jumped 50% [7] - Both companies trade at high valuations, with Trane Technologies at a forward P/E ratio of over 34 times and Lennox at nearly 30 times, compared to the S&P 500's 22 times and Nasdaq-100's 27.5 times [10]