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On the Cusp by Jim Cramer
Editor's Note: The following comments were made earlier this month in
Jim Cramer's Action Alerts PLUS
ABB, which provides automation technology to manufacturers, is on the cusp of what I suspect will be a multiyear upgrade cycle driven by higher capital spending budgets from utilities and other power-market subsegments.The asbestos settlement in February removes an albatross from ABB's neck, and I believe this company remains well positioned to benefit from increased demand from power-production facilities across the globe.
I continue to believe this stock can trade up toward $15 in the coming months.
Protect Gains by Richard Suttmeier
ABB is rated a hold according to ValuEngine, following a recent downgrade from buy. The stock is 20.7% overvalued with fair value at $10.25. The weekly chart profile shows overbought momentum with the five-week modified moving average (MMA) at $11.49 and the Feb. 27 high at $12.58. This profile is not favorable for the long-term investor to start a new position, but there are no risky levels at which to sell on strength.
The strategy in cases like this is for investors long ABB to consider a sell stop to protect long-term gains using a weekly close below the five-week MMA, which will rise each week.
Understanding ABB by Roger Nusbaum
ABB is on one hand easy to understand and on the other hand difficult to understand.
If you buy into the idea that most of the world desperately needs to modernize its infrastructure, you may want to study ABB. Company divisions include systems to make utilities more efficient, it sells things like transformers, it makes systems and technologies for the petrochemical industry. The list is seemingly endless.
You can think of ABB as a real nuts-and-bolts type of company. That makes it easy to understand.
What makes it difficult to understand is how many moving parts the company has. If you can realize that you are unlikely to be able to keep tabs on it all and can think of the management as fund managers managing a portfolio, it will be easier to own ABB.
The company's balance sheet is very solid. It has plenty of cash on hand, return on equity of 28% and very little debt.
At the time of publication Cramer's charitable trust was long ABB, although holdings can change at any time. Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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RealMoney,com contributor Richard Suttmeier is president of Global Market Consultants, Ltd. and chief market strategist for Joseph Stevens & Co., a full-service brokerage firm located in Lower Manhattan. At the time of publication, he had no positions in any of the securities mentioned in this column, but holdings can change at any time. While Suttmeier cannot provide investment advice or recommendations, he invites you to send your feedback -- click here to send him an email.
RealMoney,com contributor Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix and the author of Random Roger's Big Picture Blog. At the time of publication, Nusbaum had no positions in any of the securities mentioned in this column, although positions may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback; click here to send him an email.