Eaton Corp (ETN) is my pick as the best stock of 2012. Why do I think this? Well this is a personal pick but it also assists my readers. Eaton is a company that is not difficult to understand. Eaton has excellent exposure also known as market share. Eaton is also a company that can be affordable as well as convenient for youthful investors but at the same time is a solid blue chip stock. Although I do not espouse the term buy and hold, this one is a long time holder.
Eaton Corp based in Cleveland Ohio is an industrial powerhouse. They produce products like hydraulics and filtration systems as well as catering to the aerospace and automotive sectors. Eaton is a lot like (GE) but without the overexposure to financials, in fact Eaton does not deal with that at all. Consider Eaton a play that allows you to get exposure to all of these excellent sectors that you might be interested but with less speculation and more money! Eaton Corp is in great positioning as far as its market share is concerned than its peers. It has a market cap of over $15 billion.
Unlike expensive stocks like Google and Apple ETN trades at a P/E (price to earnings ratio) of only 12 with a forward P/E of just over 10. Only modest growth would push this stock price above those numbers. Add in a 3% dividend hike and Eaton Corp becomes an affordable stock. The only issue right now is that ETN is on the high end of its 52 week high. Any disturbances in the global economy and this stock could become cheaper.
Eaton Corp is one of a few handfuls of solid stocks that offer too good to pass up direct stock purchase and dividened reinvestment programs. This one offered through BNY Mellon has $0 costs for buying shares and automatic company paid dividend reinvestment! That’s right, you can buy shares of (ETN) and pay no brokerage fee. Even better the minimum initial investment is $100 and subsequent minimum investment is only $10. This is a great way to put dollar cost averaging to work and is one of my favorite methods of investing.
TheStreet.com along with Jim Cramer has happily added Eaton Corp to Action Alerts Plus because of its powerful truck transport sector, selling their position in competitor Cummins. I have been demanding this of Cramer for a long time now and am surprised it took so long. The sentiments on most other analysts is a hold though; UBS, Barclays, Deutsche Bank, etc. Many are assuming problems in Europe are going to withhold profits from Eaton Corp because it is a cyclical stock. That said, even without economic growth Eaton Corp provides many products and services that are a necessity without economic expantion. In fact, an economic contraction could benefit shareholders as we move in to buy a great stock even cheaper.
Eaton Corp is a buy right now all the way over $50 a share. That said, I make my positions in greater percentages when it trades at less than $40 but remain a buyer between $40-50. Eaton Corp is a great company that is not fly by night with excellent diversification and solid products. It does not rely on artificial help and is easily respected in its fields. The DSP and DRIP make this blue chip dividend player a no brainer for young investors. Want to get started in stocks? Want a cheap stock that you can add $10 a month to without fees? Eaton is the right stock for you!
The author holds a long term position in Eaton Corp (ETN). As of publishing he is dollar cost averaging adding to his position.
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