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This 'Boring' Stock Is A Great Long-Term Investment

 May 15, 2012 01:00 PM
 


(By Tim Begany) The second quarter of 2012 has been a bummer so far, especially when you think back to what was a great first quarter in which the S&P 500 rose more than 12%. But I'm not discouraged. While the recovery may be proceeding at an excruciatingly slow pace, I still think it's getting there, inch by inch.

I'm also of the opinion stocks will continue to provide the best long-term returns, even though quite a few investors have sworn them off completely. Mind you, stocks may not return the 10% or so a year they've delivered as a group during the past three-and-a-half decades, but I believe they'll significantly outpace bonds and alternatives like gold, both of which could fall dramatically in the shorter-term if the recovery keeps pressing forward. And I think it will.

Some of the best types of stocks to hold in an economy like the one we're slogging through now are the "old reliables." I've been saying this for a while, so you may know what I mean -- large companies with enduring businesses, dominant market share, sturdy balance sheets and healthy dividends. This time I'd like to tell you about a firm you may not have heard much about -- even though it has been around since 1890. It's not in a terribly glamorous business. Indeed, the company was originally founded to make small motors for electric fans. The product line quickly expanded to include things like sewing machines, dental drills and electric tools. Today, the company is a $36-billion conglomerate with five segments. Here's the rundown, with a few examples of what each segment does, though they're all into a lot more things than I've listed here:

• Process management -- valves, regulators, control elements
• Industrial automation -- electric motors, bearings, wind turbine systems
• Network power -- AC/DC power, fire pump controllers, technical and mobile workstations
• Climate technologies -- heating, air conditioning and refrigeration systems, thermostats, ceiling fans
• Tools and storage -- plumbing tools, storage and display shelving, storage racks

Like I said, the company -- Emerson Electric Co. (NYSE: EMR) -- is anything but glamorous.


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