Barron's: $ETN Is A Buy Here

1) Barron’s weekend look at $ETN

“It’s the fastest demand that I’ve seen in any business that I’ve been associated with in my professional lifetime,” Eaton CEO Craig Arnold, who has worked at industrial companies for nearly 40 years, tells Barron’s.

2) $ETN daily, weekly, and monthly charts

Morgan Stanley analyst Joshua Pokrzywinski thinks the company, with a market value of $56 billion, deserves to trade at a premium to peers, given how well-positioned it is to benefit from the electrification trend. He values the shares at 20.75 times expected earnings, resulting in a price target of $180—nearly 30% above its recent price of $140. Eaton also offers a 2.3% dividend yield.

Some of the equipment that Eaton makes, like the circuit-breaker boxes in homes, is commonplace enough to seem rudimentary. But much electric gear has become so sophisticated—such as software that allows for remote control of complex electric operations—that the field’s top companies have major competitive advantages and high barriers to entry. “This is a consolidated industry with exceptional pricing power using proven technology required to connect and control all manner of electric sources, uses, and storage,” Pokrzywinski recently wrote.

Says Arnold: “We don’t really make standard items. Everything that we do is pretty technical, highly differentiated.”