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Is Emerson Electric (EMR) Stock Worth Your Attention Right Now?

Alex Smith

Fiduciary Management, Inc recently released its Q1 2020 Investor Letter, a copy of which you can download below. The FMI Large Cap Fund posted a return of -23.0% for the quarter, underperforming its benchmark, the S&P 500 Index which returned -19.60% in the same quarter. You should check out Fiduciary Management’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.

In the said letter, Fiduciary Management highlighted a few stocks and Emerson Electric Co (NYSE:EMR) is one of them. Emerson Electric manufactures products and provides engineering services for a wide range of industrial, commercial, and consumer markets. Year-to-date, EMR stock lost 29.4% and on May 14th it had a closing price of $53.38. Its market cap is of $32.3 billion. Here is what Fiduciary Management said:

"Emerson Electric offers a wide range of products and services primarily in the areas of Automation, HVAC & Refrigeration, and Construction. The company is comprised of Automation Solutions, Climate Technologies, and Tools & Home Products. Emerson has market-leading positions thanks to their domain knowledge, innovation (differentiated technology), and services & solutions capability to address complex challenges in critical markets. Automation Solutions enable customers to maximize production while reducing costs, and Climate Technologies improves energy efficiency, enhances comfort, and protects food quality. Although a cyclical company, nearly 40% of total sales come from the maintenance, repair and optimization portion of Automation Solutions (significant installed base). The replacement nature of Climate Technologies also helps this part of the business be less cyclical in a downturn. In addition to contingency plans in the current economic environment, the company’s balance sheet is positioned very conservatively (strong investment-grade credit) and they have plenty of liquidity. With a compelling valuation, we feel that Emerson is an attractive investment opportunity over our time horizon."

In Q4 2019, the number of bullish hedge fund positions on EMR stock increased by about 5% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with EMR’s growth potential.

Disclosure: None. This article is originally published at Insider Monkey.