5-Star Stocks Poised to Pop: ABB

Based on the aggregated intelligence of 110,000 investors participating in Motley Fool CAPS, the Fool's free investing community, electrical engineering giant ABB (NYSE: ABB  ) has earned a coveted five-star ranking. Our data has shown that five-star stocks outperform the market by a significant margin; conversely, one-star stocks have woefully lagged the market average.

With that in mind, let's take a closer look at ABB's business and see what CAPS investors are saying about the stock right now.

ABB facts

Headquarters (Founded)

Zurich, Switzerland (1883)

Market Cap

$64.18 billion

Industry

Heavy electrical equipment

TTM Revenue

$30.95 billion

Management

CFO & Interim CEO Michel Demare;

Head of Power Products Division Bernhard Jucker

Return on Equity (avg. last three years)

33%

CAPS members bullish on ABB also bullish on

Vale (NYSE: RIO  )
Transocean (NYSE: RIG  )
Potash Corp. of Saskatchewan (NYSE: POT  )

CAPS members bearish on ABB also bearish on

Amazon.com (Nasdaq: AMZN  )
GameStop (NYSE: GME  )
ExxonMobil (NYSE: XOM  )

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 411 of 421 of the All-Star members who have rated ABB -- some 98% -- believe the stock will outperform the S&P 500 going forward. These All-Star bulls include rd80 and TheGarcipian, both of whom are ranked in the top 1% of our community.

In October 2007, rd80 informed our community that "ABB is well positioned to take advantage of global industrial and infrastructure expansion. For those not familiar with ABB, if they generate electricity, use electricity, control machinery, or transmit power, they're a prospective ABB customer."

A more recent pitch from TheGarcipian last month shared that bullish feeling, highlighting the possible value opportunity being offered on the shares:

PEG is moderately low at 0.84 (which is slightly less than its industry average of 0.94), and it has decent returns for its industry.

Plus, power distribution systems and technologies to make these systems more efficient and extensive will continue to be in high demand, particularly if oil stays above $100/barrel. High-priced oil will push more use of energy via coal, wind, solar, and water dams, all of which are heavily reliant upon electrical distribution systems because they are less portable than oil. While I don't think you'll get another 5X-6X gain in 5 more years, this should continue to be an excellent long-term investment.

What do you think about ABB -- or any other stock, for that matter? Make your voice heard on Motley Fool CAPS today. More than 110,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Amazon and GameStop are Motley Fool Stock Advisor selections. Try any of our Foolish newsletters today, free for 30 days.

Foolish contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (1) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 18, 2008, at 2:19 PM, edlwhite wrote:

    Since you are touting POT in this article, I want to add that two analysts raised their price targets on POT this morning (July 18). RBC raised its target from $340 to $370. UBS raised its target from $285 to $320. Of note is the fact that both of these raises were $35 higher. One might think that this is the amount each analyst thought the price woudl increase in response to the higher earnings resulting from the higher potash prices just instituted by Canpotex ($1000/tonne -- a 21% increase). Also POT has a recent press release which states they are planning 2.7M tonnes of new potash production capability by 2012. Recently an analyst also put a price target on POT of $425 (I believe it was Canacord).

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