ABB Ltd (ADR) (ABB)

TMFDeej (99.65) Submitted: 8/18/08 10:29 AM : Start Price: $24.08 ABB Score: -20.33

I am familiar with ABB and have looked at it in the past, but I hadn't realized how cheap it has gotten until it was mentioned in this week's Barron's. I guess that I shouldn't be all that surprised given the pounding that most infrastructure stocks have received lately. For those of you who are not familiar with the company, ABB is a Swedish company that manufacturers equipment for power transmission and distribution.





Despite posting outstanding quarterly numbers, including 35% earnings growth, 27% revenue growth, and a 31% increase in its backlog, ABB's share price has dropped 23% in the past three months and 15% since its earnings report in late July. ABB is now trading at a mouth-watering 14 times its estimated 2008 earnings and 12 times its estimated 2009 earnings. A company that's growing at 30%, but trading at a multiple of only 14 sounds pretty good to me.





ABB is cheap right now because everyone is afraid that the global economy is going to implode and that no one will ever build anything again. While growth is clearly slowing in many western markets, emerging markets like China and India are still experiencing tremendous growth and more than half of ABB's revenue comes from emerging markets.





Furthermore, ABB is heavily involved in the wind power, the current trendy alternative energy play. ABB provides 30% of the equipment that is needed to build a new land-based wind farms and 40% of the gear for offshore farms.





I don't see how ABB won't outperform the major indices for the next several years. I'm adding shares of ABB to my CAPS portfolio today.





Deej


No position in ABB

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