It’s been a little while since I’ve thought Eaton (ETN) was truly cheap, but like Parker-Hannifin (PH), I’ve stayed positive on Eaton as a “best of breed” among increasingly richly-valued industrials. In particular, I’ve favored Eaton for its strong leverage to electrification, as well as longer-term leverage to vehicle electrification and an aerospace recovery.
Up more than 20% since my last update, and still beating both the S&P 500 and its peer group, the valuation argument isn’t getting any easier. Management’s recent investor day did make me feel a little better about my growth expectations, though, and I still lean positive on Eaton for its leverage to long-term secular growth themes, though I do see the long-term annualized expected return as pretty pedestrian now.
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