We recently compiled a list of the 10 Best Non-Tech Stocks to Buy Now for Long Term. In this article, we are going to take a look at where Eaton Corporation plc (NYSE:ETN) stands against the other non-tech stocks.
Investing in non-technology stocks offers a range of benefits that can enhance an investor’s portfolio, providing diversification, stability, and exposure to sectors with strong growth potential. While technology companies have often dominated headlines with rapid growth, non-tech sectors have demonstrated robust performance and present compelling opportunities for investors. Diversification is a fundamental principle in investment strategy, aiming to reduce exposure to any single asset or sector. By allocating capital across various industries, investors can mitigate the impact of a downturn in any one area. Non-tech stocks, encompassing sectors such as finance, healthcare, consumer goods, and energy, often exhibit different performance cycles compared to technology stocks. This lack of perfect correlation means that when tech stocks experience volatility, non-tech stocks may remain stable or even appreciate, thereby balancing the overall portfolio risk.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
As noted in financial literature, a diversified portfolio can have less variance than the weighted average variance of its constituent assets, reducing overall volatility. Recent market data from Fidelity underscores the strong performance of non-tech sectors. Over the past 12 months, large-cap financial stocks have returned an average of 33.7%, outperforming the information technology sector’s 28.1% return during the same period. Year-to-date figures further highlight this trend, with financial stocks within the S&P 500 up 7%, while IT stocks have returned just 1.6%. Within the financial sector, consumer finance stocks have performed exceptionally well, up 54.8%, and banks follow closely with an average return of 51.3%.
Economic policies, particularly deregulation initiatives, have significantly influenced the performance of non-tech sectors. For instance, recent deregulation efforts have been identified as a key bullish theme for the stock market, with financials, consumer goods, commodities, transport, and capital goods sectors benefiting the most. Financial stocks have shown promising year-to-date returns of 7%, outperforming the technology sector’s 3% gain. Investors seeking diversification beyond the US market may find attractive opportunities in non-tech sectors globally. For example, Japanese companies have demonstrated robust corporate earnings growth, with firms like Hitachi, Sony, and Toyota simplifying their structures and focusing on core businesses. These companies have also enhanced shareholder returns through dividends and stock repurchases.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
For this article, we made a list of non-tech stocks with impressive growth profiles and strong fundamentals. The companies listed below offer a healthy mix of value and growth for investors. These stocks are also popular among hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician standing in the middle of a power station, inspecting a power distribution system.
Eaton Corporation plc (NYSE:ETN)
Number of Hedge Fund Holders: 88
Eaton Corporation plc (NYSE:ETN) is a multinational power management company. Operating cash flow for 2024 was $4.3 billion, and free cash flow was $3.5 billion; both represent increases of 19% and 23%, respectively, compared to the same period in the last year. In February, the company announced the completion of a major test labs upgrade in Tczew, Poland. The refurbished facility now features advanced equipment for testing both internal combustion engine (ICE) and electric vehicle (EV) powertrain technologies. It includes two new powertrain dynamometers: a heavy-duty transient dynamometer for developing advanced transmission systems and a medium-duty dynamometer to support powertrain testing for passenger vehicles and light to medium-duty trucks.
Overall ETN ranks 8th on our list of the best non-tech stocks to buy now for long term. While we acknowledge the potential of ETN as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than ETN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
