Is Johnson Controls (JCI) a Prospective Investment?

Diamond Hill Capital, an investment management company, released its “Mid Cap Strategy” first-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the quarter the strategy outperformed the Russell Midcap Index. The strategy returned 9.74% (gross) and 9.55% net of fees vs 8.60% for the index. As the economy and profit growth remained strong, equity markets continued their upward trend in Q1. In addition, you can check the top 5 holdings of the strategy to know its best picks in 2024.

Diamond Hill Capital Mid Cap Strategy highlighted stocks like Johnson Controls International plc (NYSE:JCI), in the first quarter 2024 investor letter. Johnson Controls International plc (NYSE:JCI) engages in engineering, manufacturing, commissioning, and retrofitting building products and systems. The one-month return of Johnson Controls International plc (NYSE:JCI) was 6.08%, and its shares gained 9.56% of their value over the last 52 weeks. On June 6, 2024, Johnson Controls International plc (NYSE:JCI) stock closed at $69.58 per share with a market capitalization of $46.874 billion.

Diamond Hill Capital Mid Cap Strategy stated the following regarding Johnson Controls International plc (NYSE:JCI) in its first quarter 2024 investor letter:

"Though valuations have increased, we continue identifying high-quality companies we believe the market is overlooking. We accordingly initiated four new positions in Q1: Generac Holdings, Diamondback Energy (FANG), Johnson Controls International plc (NYSE:JCI) and Humana. We initiated a position in Johnson Controls (JCI), a leading provider of HVAC, security and fire detection/suppression and building management systems as we believe the company is well-positioned to benefit from the secular trend toward smart buildings and a shift to high-margin services. While JCI has not executed particularly well recently, we believe the market has overreacted to these issues while also underappreciating the potential magnitude of the aforementioned secular tailwinds. We accordingly capitalized on the opportunity to establish a position at a steep discount to JCI’s HVAC peers and our estimate of intrinsic value."

A team of workers wearing white hardhani and safety goggles assembling a complex HVAC system.

Johnson Controls International plc (NYSE:JCI) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held Johnson Controls International plc (NYSE:JCI) at the end of the first quarter which was 44 in the previous quarter. The first quarter revenue of Johnson Controls International plc (NYSE:JCI) remained flat year-over-year, however, organic sales increased by 1%. While we acknowledge the potential of Johnson Controls International plc (NYSE:JCI) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed Johnson Controls International plc (NYSE:JCI) and shared the list of best dividend stocks of all time. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.