A.O. Smith Demonstrates That A Great Business Can Be A Terrible Investment (NYSE:AOS)

In the 60 or so days since I wrote my cautious piece about A.O. Smith (AOS), the shares are up about 2% against a gain of just over 8% for the S&P 500. This relative underperformance, coupled with the fact that the company has since released financial results, opens the possibility that the shares now represent good value. I’ll try to answer whether the shares are worth buying at the moment by looking at the financial history here, and by looking at the stock as a thing distinct from the actual business.

I’ll also offer an update on the options trade I recommended in my previous two articles, as I think my history with AOS might be instructive for investors seeking income from their capital. Traditionally, investors look to dividends for income. My history with A.O. Smith suggests that it’s possible to make a much greater income stream from puts

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