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4 Industrial Goods Conglomerates to Acquire, 1 to Avoid

February 22, 2012 | About:

Conglomerates have been considered to be safer investment options in the stock market. This is because they have diversified businesses and therefore have mitigated their risks. A good conglomerate is not only able to sustain itself in the worst market conditions, but also displays a high level of innovation, has strong financials, and is constantly looking for expansion opportunities. In my research, I found five industrial goods conglomerates which are worth considering as investments. I selected these five companies for research due to their strong growth history and diversified business operations.

General Electric Co. (NYSE:GE): This stock is trading at close to $19 per share with chances of rising. The market capitalization at this current price is $201 billion approximately. This price falls in the middle of the approximate 52-week trading range of $14 to $22 per share. The earnings per share (EPS) are currently rated at 1.25. Dividend yield is close to 4% and P/E ratio is 15.32.The company has a net profit margin of close to 10% and a debt-to-equity ratio of 3.90. The beta of this stock was previously rated at 1.60 but recent market news and trends depict a brighter future. It would therefore, be a good option to hold GE because there is a high probability that the company would be able to widen it competitive mode.

Financial highlights for the last quarter have been promising too. Share prices are expected to rise soon with a possibility of high capital gains. Hence, this stock would be a viable option to buy right now. GE itself is trying to help the U.S. economy to stabilize and achieve higher levels of growth by hiring military veterans and reducing the pressure on the economy.

E. I. du Pont de Nemours and Co. (NYSE:DD): This stock is trading currently at a price close to $50 per share. There has been an increase in prices over the last quarter. With a market capitalization above $47 billion, the current price falls in the middle of the 52-week trading range of $37 to $58. The earnings per share are currently 3.69. Dividend yield is well above 3% and the P/E ratio is close to 13.5. This stock has a beta of 1.46 but has received a rating of 10 which signifies that it is a safe option to invest in. It presents positive growth for the coming fiscal year with better stability than most of the other stocks. With a net profit margin of above 9% and a debt-to-equity ratio of 1.46, this stock is currently going steady.

The company is now exploring new options in order to expand and grow further. According to recent news they have initiated a $100 million deal with a Chinese solar energy company, Yingli Green Energy and are now venturing into this sector as well. Market conditions are also improving which will help the stock grow further in the next quarter. The possibility of high growth makes it a good option to buy at the moment.

Textron Inc. (NYSE:TXT): Currently trading at close to $28 per share, this stock depicts a more stable trend in prices. This stock has a 52-week trading range of close to $15 and $29 and a market capitalization of close to $8 billion. The earnings per share are 0.87 currently and are expected to remain relatively stable too. Dividend yield is approximately 0.3% and the P/E ratio is close to 32.24. Beta for this stock in the last quarter was 2.66 which makes it extremely risky and has been rated at 5 out of 10 by the industry analysts.

Although the debt-to-equity ratio is 0.90 for the previous term, the stock does not seem to be an attractive option even though some divisions of the company have been able to perform better than expected. In my opinion, it is better not to invest in this stock and it would be better to sell it sooner than later.

Danaher Corp. (NYSE:DHR): Trading prices of this stock are currently stable at close to $52 per share. The 52-week trading range is $39 and $56 approximately. The market capitalization at the current price is nearly $36 billion. Earnings per share for the stock are $2.75 and it is expected that these will remain stable for a while. The dividend yield is close to 0.2% and the P/E ratio is close to 17.8. A beta of 0.94 means that it is relatively safer than most options and has a rating of 7 out of 10 as per industry experts.

With a net profit margin of above 12% and a debt-to-equity ratio of 0.31, this stock appears to be much more stable than other stocks. It would be a good option to buy in order to create a diversified portfolio and for a safer investment purpose. This stock has been referred to as a consistent industry outperformer by experts and analysts.

Cooper Industries Plc (CBE): This stock is trading at close to $62 per share currently and the prices have been relatively stable over the last quarter. The current price is in the middle of the 52-week trading range of $42 to $70 approximately. The earnings per share are close to $4 and the market capitalization is almost $10 billion. The P/E ratio is 15.30 during this quarter and the stock offers a dividend yield of close to 2% as well. The net profit margin is approximately 12% and the beta for this stock is 1.53. This stock is a bit risky but offers somewhat impressive returns. They have even been able to report record earnings per share time and again. It can therefore be a good stock to invest in for growth and returns. In my opinion, it would be best to buy this stock for diversification and return considering the current market situation. It also presents a positive picture for future growth.

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