The huge sell-off in Europe this summer has left many blue chip companies in bargain territory. One of these is ABB Ltd.
ABB Ltd. (NYSE:ABB) – “ABB Ltd. provides power and automation technologies for utility and industrial customers worldwide. The company’s Power Products division manufactures and sells high- and medium-voltage switchgear and apparatus, circuit breakers, power and distribution transformers, and sensors. ABB's Power Systems division provides integrated power and automation solutions for power generation plants; alternating current [AC] and direct current [DC] transmission systems; and flexible alternating current systems technologies.” (Business description from Yahoo Finance)
8 reasons to buy ABB at $20 a share:
1. ABB appears to have found a technical bottom which it has bounced off of several times in the last year (See Chart)
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Click to enlarge
2. It is in the bottom quarter of its five year valuation range based on P/E, P/S, P/B and P/CF.
3. ABB yields 3.5%, and its dividend payouts have sextupled in the last five years.
4. It has an A rated balance sheet has a projected growth rate (S&P) of 13% annually over the next three years.
5. ABB sells for under 13 times this year’s earnings and under 10.5 times 2012’s consensus earnings.
6. The company has beat or met earnings estimates each of the last four quarters, and consensus earnings estimates for 2011 and 2012 have been increased over the past ninety days.
7. ABB is well positioned to take advantage of the long-term demands to increase electricity and clean water production in the emerging markets.
8. S&P has a price target of $28 on ABB, and the consensus analyst target on the stock is $31 a share.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in ABB over the next 72 hours.