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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

W.W. Grainger: Almost One Million Reasons to Buy

Stocks in this article: GWW

If the breakout follows through and begins a new uptrend, then I am in business. I ride it for all it is worth -- I hope for months, sometimes even years.

I also have a sell discipline, but I will cover that in other articles.

It also helps that Grainger is a large-cap dividend-paying stock. This is the number-four-ranked asset class at the current time.

Data from Best Stocks Now App

In addition to performance and a healthy stock chart, I also demand a decent value. I have seen too many high PE momentum darlings crash and burn over the years.

Let's have a look at the current valuation of Grainger.

Data from Best Stocks Now App

The stock is currently trading at 16.9 times forward earnings. It is expected to grow by 14.4% per year over the next five years. This makes for a PEG ratio of 1.17 which is not bad.

I then take next year's EPS estimate and extrapolate it out over the next five years at 14.4% per year. I then apply a multiple that I think is appropriate and come up with a five-year target price of $412 per year. This gives me almost 90% upside potential and a value grade of "A-".

Grainger is currently one of my highest-rated large-cap conservative stocks. As the market gets a bit more defensive here, it should continue to do well. Speaking of doing well, I love the earnings the company reported on Tuesday!

Data from Best Stocks Now App

At the time of publication clients of Gunderson Capital Management are long GWW.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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