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Strategies & Market Trends : Value Investing

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From: E_K_S	7/18/2007 1:12:50 PM
	Read Replies (2) of 78667

ABB Ltd. (ABB) - I started a small position in ABB. ABB, Ltd. provides power and automation technologies to utility and industry customers worldwide. At the current price, this is not a true value stock but I like it for two reasons: (1) The company provide services worlwide (China is 15%) and builds the infrastructure to deliver electricity that is needed in the emerging developing countries. This translates into long term growth opportunities for the company, (2) The company is located in Switzerland and transact all their business in the swiss frank and is not subject to the falling U.S. $. Hence ABB provides a hedge to the portfolio against a falling U.S. dollar and U.S. inflation (http://finance.yahoo.com/charts#chart1:symbol=usdchf=x;range=5y;indicator=volume;charttype=line;crosshair=on;logscale=on;source=undefined ) ABB has positive free flow cash flow and a rising book value as a result of building their cash reserves over the last few years. finance.yahoo.com The dividend is less than 1% but could be raised because they have such large cash reserves. Speculation is that ABB will use this cash instead for a complementary acquisition. This could allow ABB to expand their global reach providing new services. Management has a good track record of running an efficient enterprise increasing their ROA and ROE over time the last few years. You pay a premium to the market at todays prices. I will be a buyer at lower prices if there is consolidation back down to the $18 range. EKS

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