Why A. O. Smith Stock Jumped 12% in May

Shares of water heater maker A. O. Smith (NYSE: AOS) rose roughly 12% in May according to data from S&P Global Market Intelligence. That easily beat the approximately 4.5% advance in the S&P 500 Index during the month. That said, 2020 hasn't been a great one for A. O. Smith overall, with the stock essentially breaking even through the first five months of the year. With solid gains in April and May, it has only managed to claw its way back from a deep decline that started in January and ended in March. The broader market, for reference, didn't start to fall until late February. There's some valuable information in the time differences here.

A. O. Smith has two main markets, North America and China. When the company reported first-quarter earnings the differences between these two businesses were pretty stark. North American sales, which are largely driven by the replacement of older products, were up 2%. The "rest of world" segment, where sales are almost all attributable to its business in China, saw a revenue drop of 53%. Rest of world represented roughly a third of the company's sales in 2019, so this decline is a pretty big deal.

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Source Fool.com