Is This Stock Quietly Setting Up Long-Term Investors for Massive Gains?

Investing in long-term stocks doesn't translate into big gains right away, but spending time in the market instead of timing the market can result in a lucrative nest egg when you need it the most. Picking growth stocks with enticing fundamentals and tailwinds can help you outperform the S&P 500 over the long run. If that's your goal, you may want to consider Comfort Systems USA (NYSE: FIX).

The HVAC provider's stock price has more than doubled over the past year as more investors recognize its potential in the artificial intelligence (AI) industry. Those stock gains also come with compelling revenue growth and rising profit margins.

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AI chips need data cooling

Any industry that revolves around AI chips can turn into a long-term winner. These chips power robotics, AI models, and other innovations, but they also need cool temperatures to operate.

Comfort Systems USA has been serving data centers for many years, becoming one of the leading HVAC providers in the industry. A $9.38 billion backlog highlights the demand for Comfort Systems USA's solutions, and that figure is up by 65% year over year.

The HVAC provider is acquiring more companies to expand its market share as the AI industry continues to heat up. Recent acquisitions of electrical companies in Western Michigan and in Southern Florida should provide Comfort Systems USA with $200 million in incremental annual revenue.

Buying out competitors will help the HVAC provider raise prices as the AI buildout continues, which can result in higher dividend payouts. Although the stock yields only 0.24% right now, Comfort Systems USA notably raised its dividend by 20% last year. That type of dividend hike comes only with a strong balance sheet and compelling financial growth, and that type of growth rate may be the norm over the next few years.

Comfort Systems USA is spread throughout the country

Many HVAC providers specialize in a single region, but Comfort Systems USA's acquisition strategy has turned it into a juggernaut. The company has 184 locations in 139 cities across the nation, putting it close to many AI hotspots.

This level of scale gives it an advantage over most of the competition and explains why revenue jumped by 35% year over year in the third quarter.

AI data centers may eventually spread across the country as more capital flows into the industry. All those data centers need sufficient cooling to ensure the AI chips can operate. While AI isn't Comfort Systems USA's only opportunity, and it serves other types of businesses, the rapid surge in AI data centers can keep Comfort Systems USA busy and growing for years.

Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Comfort Systems USA. The Motley Fool has a disclosure policy.