Industrial Stocks Too Pricey? Compare Them to Tech Giants Microsoft, Intel
Manufacturing giants General Electric (GE), 3M (MMM), and United Technologies (UTX) all give an investor broad exposure to an expanding global economy – but why do they have to cost so much? The three industrial heavyweights each trade in the neighborhood of 15 times trailing earnings.
Maybe it’s time to consider mature tech giants as an alternative. Microsoft (MSFT) and Intel (INTC) have PEs closer to 11, yet they also provide broad exposure to the global economy and typically do well in an upturn.
Why pay more just because employees at one group of companies get their hands dirty?
On dividend yield, the two tech giants are right in the mix with the older, supposedly more stable companies.
And Microsoft and Intel enjoy stronger profit margins.
There is always the possibility that a tech company becomes obsolete, of course, replaced by a more elegant piece of software of gadget. But absent that, Microsoft and Intel generally outclass the manufacturers in revenue growth.
As a result, they're more than holding their own in terms of generating earnings.