1. Eaton Corporation PLC (NYSE:ETN)
Number of Hedge Fund Investors: 90
Jim Cramer was asked for his thoughts about Eaton Corporation PLC (NYSE:ETN) and the stock’s decline over the past few days. Cramer recommended the investor hold the stock and not sell it.
“Eaton Corporation PLC (NYSE:ETN) is a Buy and Hold story. They’ve really done incredible work to be able to revolutionize that portfolio. They are pure winners at Eaton. Do not sell. Own.”
The Electrical Americas sement remains the standout performer for Eaton Corporation PLC (NYSE:ETN) driven by strong demand from data centers, utilities, and manufacturers. This demand is expected to continue, with the segment maintaining a book-to-bill ratio of 1.2 and a 26% increase in backlog year-over-year. Growth in the Electrical Global segment is more subdued, though still positive, as many countries lag behind the US in key secular trends. However, this segment is facing greater challenges in expanding margins compared to its domestic counterpart. The Aerospace segment is also performing well, posting growth in sales, margins, and order backlog, despite operational disruptions from Hurricane Helene and the Boeing (BA) strike in Q3. The key challenges for the company lie in its two automotive segments, Vehicle and eMobility. Demand for electric vehicles has slowed significantly, and commercial vehicle demand in the internal combustion engine (ICE) market is also declining.
For 2025, all of Eaton Corporation PLC (NYSE:ETN) segments, except for commercial vehicles, are projected to grow, with the commercial vehicle segment representing just 7% of Eaton’s sales. Data centers, commercial aerospace, and electric vehicles are expected to see strong double-digit growth, collectively accounting for 29% of Eaton Corporation PLC (NYSE:ETN) sales.
Ave Maria World Equity Fund stated the following regarding Eaton Corporation plc (NYSE:ETN) in its first quarter 2024 investor letter:
“Eaton Corporation plc (NYSE:ETN) is an intelligent power management company. The company is a long-term beneficiary in the trend towards electrification, energy transition and digitalization. Eaton is also benefiting from unprecedented global stimuli such as the Inflation Reduction Act, Infrastructure Investment and Jobs Act, the Chips and Science Act and the EU recovery plan known as the NextGenerationEU.”
While we acknowledge the potential of Eaton Corporation PLC (NYSE:ETN), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI 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.
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