What Happened?
A number of stocks fell in the afternoon session after geopolitical tensions in the Middle East sent crude oil prices soaring, stoking fears of resurgent inflation.
The price for Brent crude, the international benchmark, leaped over 6% to $82.57 a barrel amid an escalating war with Iran, which has threatened to block the Strait of Hormuz. This critical waterway handles about 20% of global oil flow. A sustained increase in energy prices could translate to higher inflation, potentially impacting consumer spending and corporate earnings. This scenario also complicates the Federal Reserve's path forward, as persistent inflation could delay anticipated interest rate cuts that investors have been counting on to support the economy.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Construction Machinery company Terex (NYSE: TEX) fell 4.2%. Is now the time to buy Terex? Access our full analysis report here, it’s free.
- Construction Machinery company Caterpillar (NYSE: CAT) fell 4.5%. Is now the time to buy Caterpillar? Access our full analysis report here, it’s free.
- Electronic Components company Littelfuse (NASDAQ: LFUS) fell 4.2%. Is now the time to buy Littelfuse? Access our full analysis report here, it’s free.
- Gas and Liquid Handling company Flowserve (NYSE: FLS) fell 3.9%. Is now the time to buy Flowserve? Access our full analysis report here, it’s free.
- HVAC and Water Systems company AAON (NASDAQ: AAON) fell 7.7%. Is now the time to buy AAON? Access our full analysis report here, it’s free.
Zooming In On AAON (AAON)
AAON’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 24 hours ago when the stock gained 4.8% on the news that it reported fourth-quarter results where a major revenue beat and a surging order backlog appeared to outweigh an earnings miss. Revenue for the quarter grew 42.5% year on year to $424.2 million, comfortably beating Wall Street's expectations of $374.1 million. This strong top-line performance was complemented by a record backlog of $1.83 billion, which increased 111% from the previous year, signaling robust future demand. However, the results were not entirely positive, as the company's adjusted earnings per share of $0.39 fell short of analysts' consensus estimates of $0.46. Despite the earnings miss, the figure still represented a 30% increase from the $0.30 per share reported in the same quarter last year, and investors seemingly focused on the impressive sales and backlog growth.
AAON is up 22.1% since the beginning of the year, but at $96.70 per share, it is still trading 9.5% below its 52-week high of $106.87 from May 2025. Investors who bought $1,000 worth of AAON’s shares 5 years ago would now be looking at an investment worth $1,958.
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