New Trade for May 15th, 2023

Stocks edged higher this morning amid easing concerns about the debt ceiling as negotiations in Washington gained steam.  According to Oppenheimer’s John Stoltzfus, investors are “looking ahead to the potential benefits likely to come from the Fed’s current actions to bring about what we view as an end of a period of ‘free money.’” The strategist also pointed out that the “next new normal” could mean a backdrop where momentum takes a back seat to fundamentals.  

Today’s trade focuses on a hidden gem from the tech and engineering sector that has been  silently revolutionizing industries, catering to customers worldwide for over a century.  Despite its impressive track record, this stock has faced a recent setback and may be poised for a remarkable rebound.

Emerson Electric Co (EMR) 

Emerson Electric Co. (EMR) is a technology and engineering firm that serves industrial, commercial, and consumer customers globally. EMR supplies oil and gas and improves industrial production planning, management, and maintenance with decades of optimization. EMR also deals in air conditioning and refrigeration. EMR was founded in 1890 in Saint Louis, MO, where its headquarters remain. Currently down YTD by 12.92%, EMR has a market cap of $47.8 billion and an enterprise value of $56 billion, with a P/E ratio of 18.67x and year-over-year growth in key areas such as revenue (+14.13%), EPS (+22.12%), net income (+17.51%), profit margin (+2.98%), and operating income (+28.06%). EMR reports a TTM revenue of $18.5 billion at $4.48 per share, from which it made a $2.91 billion profit with a 23.55% net margin. EMR most recently beat analysts’ EPS and revenue forecasts by margins of 11.51% and 2.96%, respectively, and shows a free cash flow of just over $3 billion. EMR has an annual dividend yield of 2.49% and a quarterly payout of 52 cents ($2.08/yr) per share. With a 10-day average trading volume of 3.57 million shares, EMR has been assigned a median price target of $104, with a high of $122 and a low of $83. This suggests a nearly 46% price jump from EMR’s current position, and analysts weigh in on the stock with 17 buy ratings and 8 hold ratings. I see a great “buy the dip” opportunity here.

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