Watsco (WSO) still stands out as one of the cleanest distribution plays on the board.

WSO’s financial profile is exactly why I’m compelled to stay conviction-heavy even as the stock tests what the analysts call fair value. Talk about a case for structural resilience anchored by a $433 million cash position and $300 million in short-term investments that significantly dwarfs its total debt. This robust liquidity, paired with a massive 156x interest coverage and a consistent dividend that management just hiked by 10 percent, provides a powerful margin of safety while the company capitalizes on the HVAC replacement cycle.

The recent news of the Jackson Supply acquisition and the high single-digit growth management reported for April serves as the final layer of reassurance imo, signaling a team that is focused on strategic expansion while the market is still pricing in the trough. The housing market is still weak, but the interest rate will definitely come down to restart the housing market. I think there is plenty of room for this to re-rate higher once the macro conditions catch up.