Investors should profit from their smaller size

Article Excerpt

These two industrial giants are aggressively shrinking their operations. That should improve their outlook as investors tend to prefer smaller, easier-to-understand businesses. Even so, we prefer ABB over GE for your new buying. ABB LTD. ADRs $22 is a buy. The stock (New York symbol ABB; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs o/s: 2.1 billion; Market cap: $46.2 billion; P.S. ratio: 1.7; Divd. yield: 3.6%; TSINetwork Rating: Above Average; www.abb.com) gives you a stake in this manufacturer of transformers, transmission systems and circuit breakers for electrical utilities. ABB also makes automation systems and robotics for industrial clients. In December 2018, the company agreed to sell 80.1% of its power grid business to Japan’s Hitachi for $11 billion. Hitachi reserves the right to buy the remaining stake. The deal should close in early 2020. ABB will use the proceeds to lift investor value through a $7.7 billion buyback plan. It has also moved to sell some of its less-important businesses. That’s why its revenue in…

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