3 Smart Stocks You Can Buy and Hold Long-Term Right Now for $500

These companies are located in very attractive end markets.

emerson electric (EMR 0.25%), carrier global (card -1.80%)and Allegion (to 0.41%) For now, it’s a smart buy for both reasons. First, each management team is aggressively restructuring the business toward attractive long-term growth markets. Second, if you are only investing a relatively small amount, it may be a good idea to hold stocks for a long period of time to minimize transaction costs, and the growth prospects of all three justify long-term holding.

Emerson Electrical & Automation

Emerson Electric’s transformation to become a pure automation company continues. A long journey that began with a failed acquisition rockwell automation Acquiring the company would have added to Rockwell’s expertise in factory automation and Emerson’s strengths in process automation (liquids and materials).

The bid failed, and since then Emerson has been moving slowly toward automation anyway. We sold a majority stake in our climate technology business to the following companies: black stone It also recently announced it would sell its remaining stake in its climate technology business for $3.5 billion this year.

Meanwhile, it donated $6 billion in cash to industrial software companies. Aspen Tech Emerson also completed the $8.2 billion acquisition of automated test and measurement systems company NI in 2023.

AspenTech’s transaction with NI serves adjacent markets in industrial software and test and measurement and strengthens the company’s automation and the industrial software that supports it. Both are very attractive markets. This is because automation improves efficiency and accuracy and reduces costs, allowing manufacturing to return to the United States.

Meanwhile, the development of digital technologies (digital twins, Internet of Things, etc.) and the creation of smart factories and process plants based on industrial software are causing a step change in the productivity of industrial activities. This signals an exciting future for Emerson Electric.

Carrier Global and Emission Reduction

Heating, ventilation and air conditioning (HVAC) company Carrier Global is also on a transformation journey. Carrier Global, formerly part of United Technologies, was spun off in 2020. Since then, management has repurposed the company to focus on its core competencies and expand its ability to help customers achieve their net-zero emissions goals.

A $1.1 billion stake in commercial and industrial refrigeration company Beijer Ref was sold in 2020. Chubb’s fire and security business was sold for $3.1 billion in 2022, and in March 2024 there was an announcement that it would sell its industrial fire protection business for $1.425 billion. It recently closed down its stake in the security business. honeywell It was acquired for $4.95 billion, and management aims to sell its residential and commercial fire protection division this year.

These divestitures eliminated non-core businesses, and the $12 billion acquisition of European company Viessman Climate Solutions (heat pumps, gas heating, AC) signaled management’s intention to seize the opportunity to become a global player in leading intelligent climate solutions. indicates.

The HVAC industry plays an important role in reducing emissions as buildings and construction account for 40% of global greenhouse gas emissions. Therefore, Carrier’s focus on investing in more efficient heat pumps, HVAC systems, and digital technology makes sense and sets the company up for excellent long-term growth.

Allegion is transforming security

The electronic and mechanical worlds are converging into security and access solutions. While doors once were opened mechanically using keys, in the future they will incorporate Internet of Electronic Things technology to significantly improve functionality.

For example, digital technology allows building operators to remotely identify, control and monitor who has access to which areas. This is a significant advantage in enhancing security concerns and can also improve operational efficiency in institutional or commercial environments.

About 70% of Allegion’s sales still come from mechanical products, but there are long-term opportunities for growth, particularly in the non-residential electronics and software solutions markets.

So Allegion management continues to make acquisitions that fuel growth, including a $900 million acquisition. Stanley Black and DeckerWe will enter the automatic entry solution business in 2022 and attract many small businesses in the field.

Man smiling while chart showing on laptop screen.

Image source: Getty Images.

Stocks to buy?

All three companies are refocusing on growth markets, and all are cash-generating companies trading at favorable valuations. By my calculations and estimates by Wall Street analysts, Emerson Electric is trading at 18.2 times 2025 free cash flow, Carrier Global is at 19.2 times, and Allegion is at 16.3 times. As a result, they are attractive stocks for long-term investors looking to dip their toes into the market.

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