This global electrical equipment maker is expected to grow earnings by more than 14% annually, over the next five years. It pays a current dividend yield of 2.28%, paid annually.
ABB Ltd (ABB)
From Positive Patterns
Things are really getting interesting at ABB Ltd. The newer CEO has been getting rid of lower margin/low growth stuff, and here’s the proof it is working. Management states that 60% of revenue is now from growth divisions—up an impressive 37% from the year before. For such a big company—that is impressive progress. ABB’s EV Mobility is #1 in EV charging solutions and is way ahead of the pack—way ahead! ABB announced it will IPO the E-Mobility business in 2nd Q/22—exciting!
After all, ABB is a pioneering technology leader in electrification products for robotics, motion, EV equipment, and industrial automation. ABB has made several big sales of divisions with low-growth, and the company is using the proceeds to invest more money in the promising growth areas.
ABB has an A+ rated balance sheet, and once the latest sale is complete, the company will have as much cash on the balance sheet as debt—this for a company with a market-cap of $71 Billion. It is also likely ABB will be raising the (easily earned) dividend. The company is still in the midst of a 10% stock buyback, and management is making it clear that they are working hard to increase net profit margins by selling less profitable businesses and expanding their reach into their (promising) growth divisions—especially Motion, Robotics, and Automation.
ABB is a player in several significant growth industries and has management that is on-the-ball, as they are making important moves to exploit what is occurring in the EV/Automation/ Industrial-Robots-AI world in which we now live.
This is not just a company with “HYPE”, this a legitimate organic growth play with earnings. It has been good for us so far, and I think the stock is still a buy here—and I will move my buy up to $40.
Bob Howard, Positive Patterns, P.O. Box 310, Turners, MO 65765, 417-887-4486, January 5, 2022