4-Star Stocks Poised to Pop: Eaton

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, industrial parts provider Eaton (NYS: ETN) has earned a respected four-star ranking.

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$13.9 billion
IndustryIndustrial machinery
Trailing-12-Month Revenue$15.1 billion
Management

CEO Alexander Cutler (since 2000)

CFO Richard Fearon (since 2002)

Return on Equity (Average, Past 3 Years)11.5%
Cash/Debt$883 million / $3.77 billion
Dividend Yield3.3%
Competitors

ITT (NYS: ITT)

Johnson Controls (NYS: JCI)

Honeywell International (NYS: HON)

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

On CAPS, 97% of the 764 members who have rated Eaton believe the stock will outperform the S&P 500 going forward. These bulls include All-Star 4thRockFool, who is ranked in the top 15% of our community, and ruggedcrosspro.

This week, 4thRockFool tapped Eaton as timely bargain:

Well run but battered blue chip with low P/E and nice dividend of ~3.5%. When economic recovery comes, ETN should outperform. In the meantime, dividend provides some protection and beats parking your money in treasuries or money market funds.

In fact, Eaton currently sports a cheapish forward P/E of 8.5. That represents a slight discount to competitors like ITT (8.9), Johnson Controls (9.8), and Honeywell (9.8).

CAPS member ruggedcrosspro elaborates on the bargain opportunity:

Perhaps not the most glamorous, it is nonetheless a very consistent company (and has split several times over the many years i've owned it) and pays its dividend quarter after quarter after quarter. I don't understand the recent price drop -- it's definitely not based on its quarterly performance. But on the upside, it's relatively cheap to buy now (and I'm buying more shares as my limited means allow). It's definitely a long-term play, but it has very little downside.

What do you think about Eaton, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!  

Interested in another easy way to track Eaton?Add it to your watchlist.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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