A.O. Smith is a pure-play water technology company with a leading market share in residential and commercial water heaters in North America. Acquisitions in the early to mid-2000s consolidated the North American water heater market and cemented the firm’s leading market position. The firm bolstered its boiler market share with its 2011 acquisition of Lochinvar. This was a savvy move, in our view, as the company paid a fair price to expand in an adjacent market with a margin-accretive product line. The water heater and boiler market in North America is a rational oligopoly, but the market is mature with limited growth potential. To boost its growth prospects, the company entered China in 1995, India in 2008, and the water treatment market in 2016 with its acquisition of Aquasana.