Please ensure Javascript is enabled for purposes of website accessibility

5-Star Stocks Poised to Pop: Eaton

By Brian D. Pacampara, CFA - Updated Apr 5, 2017 at 7:54PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Market-trouncing returns could be written in these five stars.

Based on the aggregated intelligence of 125,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, industrial parts provider Eaton (NYSE:ETN) 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 woefully lag the market average.

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

Eaton facts

Headquarters (founded)

Cleveland (1916)

Market Cap

$7.44 billion

Industry

Industrial Machinery

Trailing-12-Month Revenue

$15.26 billion

Management

CEO Alexander Cutler (since 2000)

CFO Richard Fearon (since 2002)

Return on Equity (average last three years)

20.6%

Dividend Yield

4.4%

Competitors

Parker Hannifin (NYSE:PH)

Emerson Electric (NYSE:EMR)

CAPS members bullish on ETN also bullish on:

General Electric (NYSE:GE)

Transocean (NYSE:RIG)

CAPS members bearish on ETN also bearish on:

Northrop Grumman (NYSE:NOC)

Corning (NYSE:GLW)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS.

Over on CAPS, some 98% of the 608 members who have rated Eaton believe the stock will outperform the S&P 500 going forward. These bulls include CAPS All-Star TMFSmashy (aka Toby Shute) and RetireOrExpire.

Earlier this month, TMFSmashy noted three of the company's strong points: "Good long-term record w/ relatively low earnings volatility for an industrial firm, a rising dividend, and valued at ~8x normalized earnings."

In a pitch from late last month, RetireOrExpire agrees, tapping Eaton as a strong business priced for imperfection:

The stock has been hammered down because of auto issues, however auto is only about 28% of the company revenue. Even in that 28% ETN supplies parts for both foriegn and domestic players. ... Granted losing 20% of your revenue isn't great but that assumes all 3 of the BIG 3 fail and fail completely (as in orders drop to $0.00). Even still the company has been hammered down 50%. Even worst case scenario the company only has room to go up. Given the other 3/4th of the company deal w/ power supply, switching, and distribution it could benefit from [a] stimulus09 play.

What do you think about Eaton, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 125,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

On Jan. 12, 2009, Fool co-founder David Gardner, Jeff Fischer, and their Motley Fool Pro team will accept new subscribers to their real-money portfolio service. Motley Fool Pro is investing $1 million of the Fool's own money in long and short positions in a range of securities, including common stocks, put and call options, and exchange-traded funds (ETFs). They also incorporate proprietary CAPS "community intelligence" data into their research. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

By posting on CAPS, you can help our Foolanthropy efforts to promote financial literacy. The Fool's "My 2 Cents" campaign will donate $0.02 for each message posted on any of our discussion boards, as well as for each CAPS pitch, during the month of December.

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

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Eaton Corporation plc Stock Quote
Eaton Corporation plc
ETN
$147.93 (-0.48%) $0.72
General Electric Company Stock Quote
General Electric Company
GE
$75.18 (1.10%) $0.82
Transocean Ltd. Stock Quote
Transocean Ltd.
RIG
$3.45 (0.29%) $0.01
Parker-Hannifin Corporation Stock Quote
Parker-Hannifin Corporation
PH
$292.55 (-0.09%) $0.27
Corning Incorporated Stock Quote
Corning Incorporated
GLW
$35.90 (0.28%) $0.10
Emerson Electric Co. Stock Quote
Emerson Electric Co.
EMR
$90.03 (-0.40%) $0.36
Northrop Grumman Corporation Stock Quote
Northrop Grumman Corporation
NOC
$470.05 (-1.58%) $-7.54

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.