ABB Ltd. (
offers investors a nice mix of stability and growth.
Though the stock is volatile, its up and down moves are
somewhat predictable. Several times since 2010, the shares have
traded up to $21, only to be met with selling and driven back to
$16. The stock managed to eclipse $21 in 2011. But it quickly
fell back down to $16 within a few months.
So the price range for ABB is usually predictable. It's a big
range, encompassing 30%. But it's been easy to pick out the
optimal buying opportunities during the past three years.
Moreover, investors managed to collect a solid yield while the
shares moved sideways. The current yield is 3.1%, and it's
dividend increased every year since 2009. So even if an investor
missed the buying opportunities near $16 (and the many 30% rises
to $21 resistance), the yield would have supplied a satisfactory
In addition to the stability, the stock also offers earnings
growth. Analysts expect EPS to increase to $1.50 this year from
$1.18 in 2012. EPS is expected to climb to $1.65 in 2014.
ABB is a diversified industrial machine and electrical equipment
manufacturer. It has a huge global business, and the company is
valued at more than $52 billion.
Moreover, the company is involved in one of the hottest trends in
technology: robots. Many people believe that machines will
in manufacturing facilities.
ABB's robotics division represents roughly 18% to 20% of total
revenue in any given quarter. And CEO Joseph M. Hogan hinted
during a February conference call that the robotics business had
a very good fourth quarter.
In addition to its robotics revenue, the company also generates
roughly 50% of total sales from late-cycle businesses. Late-cycle
businesses are companies that excel during the latter part of a
recovery, and typically include utilities and other slow-growth
industries. This is good news for ABB because many investors feel
that the global economy is in the later stages of a recovery
The combination of growth and stability is likely why investors
bid ABB through $21 resistance (blue arrows) this year. This
breakout is notable because that resistance level has been so
potent. Should ABB remain above this prior resistance point,
investors have every reason to believe that this stock will rally
to new highs.
This chart shows the price of
shares along with an important former resistance level to
Equities mentioned in this article: ABB
Positions held in companies mentioned above:
ChartWatch: A Strong Insurance Stock