Florida has seen a massive amount of migration to the state as more people move from the northern and western parts of the U.S. These trends have started to cool, but I think companies in Florida will be able to capitalize on the ongoing boom for a long time.
Of course, it’s not just the population boom that’s making Florida a hot place to invest. The state’s GDP grew at a 6.1% clip in 2023. Moreover, the U.S. is seeing a wave of retirees migrate to warmer climates. Importantly, more than 11,200 baby boomers will turn 65 every day from 2024 through 2027. A lot of these people are going to choose to settle in warmer climates such as Florida.
Thus, I think it’s a good idea to buy up some stocks that are poised to benefit from these trends. Here are three such Florida stocks to look into right now.
St Joe Co (JOE)
The St. Joe Company (NYSE:JOE) is a leading Florida real estate developer capitalizing on the state’s booming population growth and housing demand. I believe St. Joe is well-positioned to ride the mega trend of domestic migration to lower-cost, business-friendly states like Florida.
In Q1, Joe’s revenue surged 20% to $87.8 million as people flocked to their communities. The company’s hospitality segment shone, with revenue jumping 60% to $39.3 million as hotel rooms and club memberships swelled. Residential real estate also stayed hot, with revenue up 10% as average selling prices surged. The company’s Hospitality and Commercial segments are actually responsible for most of St. Joe’s revenue, and this growth is accelerating.
While many fear a housing crash, Florida’s real estate market looks resilient. The state has a major housing shortage that migration is only exacerbating. Transplants are continuing to buy homes, driving steady demand. St. Joe is cashing in, with 1,335 homesites under contract worth $119.8 million as of March.
The company’s strong Q1 numbers show it is riding the state’s powerful demographic tailwinds. This unique real estate play looks poised to thrive as the Sunshine State booms.
Ryder System (R)
Ryder System (NYSE:R) provides supply chain, dedicated transportation, and fleet management solutions. I see strong tailwinds propelling Ryder’s growth beyond just Florida’s booming economy. Ryder is benefiting from the surge in e-commerce and companies overhauling supply chains for greater resilience post-pandemic. The nationwide truck driver shortage is also driving more businesses to outsource fleets to Ryder.
In Q1, Ryder delivered solid results despite a challenging freight environment, with earnings per share of $2.14, beating estimates by 43 cents. Revenue grew 4.95% to $3.1 billion, exceeding expectations by $35.84 million. Notably, the company’s management team highlighted that transformative changes to de-risk its business model and enhance returns have significantly improved Ryder’s earnings power versus prior cycles.
The recent acquisitions of Cardinal Logistics and Impact Fulfillment Services are expanding Ryder’s capabilities in dedicated transportation and value-added warehousing. I’m bullish on the long-term growth runway ahead, supported by the secular trend toward outsourcing logistics. With a 2.36% dividend yield and initiatives enhancing returns, R stock looks poised to outperform.
Watsco (WSO)
Watsco (NYSE:WSO) distributes air conditioning, heating, and refrigeration equipment and related parts in the HVAC/R industry. I believe Watsco is poised to capitalize on the mega trend of people moving to the Sun Belt states, especially Florida. As more folks relocate to hotter climates, the demand for air conditioning will only intensify, particularly with worsening heat waves. Watsco did underperform in Q1 due to a traditionally slow season. In the short term, the stock could also see a small correction as it trades at a historically high premium versus its trailing twelve month earnings.
However, I expect more positivity in the summer quarter. Additionally, earnings beats could drive WSO stock much higher.
The company is seeing compounding growth in the HVAC sector, with its stock surging nearly 200% over the past five years. Watsco also rewards shareholders with a 2.23% dividend yield and recently boosted its annual dividend by 10% to $10.80 per share, marking its 50th consecutive year of paying dividends. With a strong balance sheet and a fragmented $64 billion North American market ripe for consolidation, Watsco appears well-positioned to ride the tailwinds of the southern migration trend.
On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
