Shares of power management provider Eaton are breaking out of a cup with handle today, according to IBD MarketSmith. The growth stock has a buy point of 229.
The base was formed entirely above the 200-day moving average. The growth stock has outperformed the S&P 500 year to date, boasting a gain of 46% vs. the S&P's 18% gain. Eaton is today's selection for IBD 50 Stocks To Watch.
The energy play has strong IBD ratings. Its Composite Rating is 95, while the EPS Rating is 93. A Relative Strength Rating of 92 also shows market leadership.
Shares rose after third-quarter earnings were announced Oct. 31 and retook the 50-day moving average amid a four-day winning streak. Sales of $5.9 billion grew 11%, while earnings per share of $2.47 were up 22%.
Sales grew in all segments while the backlog rose 18% from the year-ago quarter. For the fourth quarter, the company gave earnings guidance of $2.44 per share and raised the midpoint of its earnings guidance for the full year to $9 per share.
Growth Stock Leads Group
Eaton holds first place in the diversified operations industry group. The company provides electrification, digitization and power management hardware such as inverters, circuit breakers, fuses, power distribution units and surge protectors as well as the software to manage and optimize power distribution.
It offers extensible development tools as well as AI and machine learning algorithms for cloud and on-premise applications.
Eaton is also an energy transition play. The company's Power Connections business entered the EV and internal combustion engines market in October and will provide stamped battery terminals that can be customized to several battery standards. The company also plans on becoming carbon neutral by 2030.
More funds have been buying Eaton shares over the past five quarters. Growing institutional support has earned the stock an Accumulation/Distribution Rating of B-. The MF Growth Fund (MFEGX) and Fidelity Contrafund (FCNTX) hold ETN stock.
Exchange traded funds holding the EV play include First Trust Nasdaq Clean Edge Smart GRID Infrastructure Index and Carbon Collective Climate Solutions U.S. Equity.
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