Just to echo your post...
ABB (ABB): Power play on infrastructure buildout
Posted Dec 18th 2008 10:10AM by Steven Halpern
This post is part of a special report, A Dozen Ways to Play an Obama Building Boom.
"The world is focused on an infrastructure buildout, and one of the best ways to capture that trend is with Zurich-based infrastructure giant ABB (NYSE: ABB)," says Keith Fitz-Gerald.
In The Money Map Report, he explains, "We've been recommending the stock throughout this crisis; and while its up 50% off its low, we believe the best is still to come."
"Chances are you'll be hearing a lot of talk about it in the years to come as governments around the world initiate massive domestic fixed asset programs to create jobs, and improve critical services such as power distribution.
"President-elect Obama is focused on infrastructure while China's $586 billion stimulus package is also aimed at infrastructure building.
"World leaders recognize that the one thing they need, that they can't afford to lose, and that their people can't do without, is power. And lots of it. And one of the best ways to capture that is with Zurich-based ABB.
"The company is the global leader in the business of building, refurbishing, and creating the supplies for industrial, municipal, and national power supplies. It will also be a huge beneficiary of China's $586 billion stimulus package, which is aimed at infrastructure build-out.
"Meanwhile ABB is sitting on a huge pile of cash and short term investments ($7.1 billion as of Q3). And sales and income have grown by 25.40% and 25.30% over the last 12 months.
"Return on equity is a healthy 39.2%. Which means, not only are they growing, but they've got plenty of cash to fund new growth and acquisitions at a time when their competition is struggling just to survive.
"Now it's become popular in recent months to argue that the company will drop expectations as the global economy slows down. And, yes, ABB is lowering estimates.
"So far, the company has taken things down 9 cents per share for 2008. But 2009 estimates remain on track for about $1.50 per share in 2009 which would correspond to a 3% drop in earnings growth rates. However, forecasted growth over the next five years remains a healthy 9.5%.
"Investors can feel comfortable buying ABB. But don't just pile in all at once. Because the markets remain uncertain, the best way is to dollar-cost average your way into the stock over time. In addition to the growth story, ABB sports a 3.8% yield."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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