Johnson Controls ( JCI), which makes building heating and cooling systems, has been rated a buy since August 2005, based on its impressive growth in revenue and net income. The company recently reported that its fiscal fourth-quarter income from continuing operations increased to $469 million, or 78 cents a share. Fourth-quarter revenue increased by 10.6% compared with the same period last year, driven by strong growth in the building efficiency and power solutions segments. Building efficiency rose by 15.4% to $3.61 billion in the quarter, mainly due to strong commercial building markets globally and higher demand for its products to improve energy efficiency and lower operating costs in nonresidential buildings. For 2007, net income increased 21.8% to $1.25 billion, or $2.09 a share. Revenue rose 7.4% to $34.62 billion for the year. Johnson Controls' performance largely depends on its ability to drive higher sales from its building efficiency and automotive experience segments. A sluggish housing sector and rising fuel prices hurting the automobile industry might restrict revenue growth in both segments.
Parker-Hannifin ( PH), which makes motion and control technologies and systems, has been rated a buy since October 2006. Its fiscal first-quarter net income increased 9% from a year ago to $229.60 million, bolstered by strong sales growth in its industrial international and aerospace segments. Its revenue increased by 9.2% over the same timeframe, driven by a mix of organic growth, strategic acquisitions and positive foreign currency exchange rates.