Stockchase Opinions

Gordon Reid Eaton Corp. ETN-N WATCH Mar 18, 2025

He did well owning this, but sold around 33x PE, too rich. It went higher on momentum, but has sold hard lately. He's looking at it now. A very good company in data centre expansion. Lots of growth, but would buy at a lower PE.

$290.310

Stock price when the opinion was issued

electrical electronic
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BUY ON WEAKNESS

Great stock, but trades erratically. Would recommend buying on weakness. 

PAST TOP PICK
(A Top Pick Aug 11/23, Up 34%)

Will continue to own. Electrical components demand demand will remain strong. Ability to generate profits also very strong. Re-shoring of manufacturing will continue, and will also generate profits. 

BUY

She bought more. They have 30% market share in their electrical business, which holds exciting growth. So many drivers: utilities needing upgrading, onshoring of supply chains, data centres.

BUY

Sells things needed to build power capacity. Future is very good, especially with infrastructure spends around the power grid. Continues to grow double digits.

PAST TOP PICK
(A Top Pick Nov 24/23, Up 60%)

Electrical components are driving the business. Has done very well. The hype is from the electrical side and AI/data centres. Sold it. Feels it is stretched on the valuation side. Trading at 33x earnings. Expectations for next year and the following year are in the 10% range. Not enough growth versus current price. 

BUY ON WEAKNESS

He added shares during Monday's sharp sell-off. They report Friday. It's a fine, long-term story

DON'T BUY

Sometimes a report doesn't meet expectations, despite being a good quarter. This happened to Eaton.

WAIT

Can benefit from electrification and selling transmitters and generators. Pulled back, but still not cheap; if that continues, might be worth dipping your toe in.

BUY

She trimmed GE Vernoa to buy more Eaton and Quanta Services, and both just reported blow-out quarters. Quanta: EBITDA +40%, backlog +14%. Eaton: data centres +45%, pipeline +65%, and backlog 3x more than normal. Good valuations.