Emerson Electric (EMR)

It is in the same category as GE-N, but not as interesting. It saw a recent peak in 2014. You want to own this stock at a time like this. Own it inexpensively and into a growth economy.

This is below the 50, 100 and 200 day moving averages, which themselves are falling, so the trend looks pretty negative from a technical perspective. Trading at 15X forward earnings with probably a 5%-6% long-term growth rate, putting it at a 3X PEG ratio. Too rich for him.

(Top Pick Sep 9/14, Down 26.18%) Some of their key end markets are 15% energy. They are seeing weakening demand. Emerging markets are 37% of their revenues. 12% China. The market is selling down these names. It is a well managed 125 year old company.

This has gone from earnings growth to earnings deterioration. Earnings are expected to be down 18% this quarter. Missed their estimates by 15% and revenue is turning negative. They are impacted by the strong US$, as about 46% of their sales are in Canada and the US, and the rest is international. Industrials are not leading this market. Companies that have a lot of global sales are having a tougher time in general. Also, they are not seeing growth in their earnings and revenues. There are better places to focus.

This has been somewhat flat because it does have energy exposure. Energy represents about 25% of their business. Very well-managed. This is a price to earnings multiple story and trades at a discount to where it has traded in the past, because of the overhang on energy. Management just reported a forecast that it was going to be a tough few quarters going forward. They have global manufacturing facilities, and they’re shifting some of their manufacturing from the US to other areas where they can compete more competitively. Dividend yield of around 3%. There is no rush to buy this, but on a weak day you could pick some up.

A very well managed diversified, industrial company. About 44% of their revenues are in North America and the rest are in Europe and Asia. Their products and services measure, regulate, monitor and automate various manufacturing processes across various end markets and industries. They provide power distribution and power generation to data centers, any sort of environment that needs un-interruptible power sources. Good management. Increases their dividends every year. Dividend yield of 2.82%.

Very high quality, global, industrial company. A great way to play the increasing industrial manufacturing activity in the US and the rising CapX, as well as improving globally. They automate, regulate, monitor and measure manufacturing processes and power generation. Also, big manufacturers of compressors. Dividend yield of 2.64%.

In an industrial complex, it would be comparable to a General Electric (GE-T) or something similar. Feels the whole industrial complex in that space will move higher. Not as keen on this business simply because of the emerging-market exposure it has. In different segments of their businesses, there is fairly flat to slightly negative growth. Feels there is more potential trouble to come down the road from emerging markets.