A Comeback Play in 2 Major Sectors


You don't usually come across a quality company that operates in two of the most promising sectors for the next two decades (or more), and that's a bargain, and has a great dividend reinvestment plan, observes Charles Carlson of DRIP Investor.

Technology and health care are two of the more attractive sectors for long-term investors. Agilent Technologies (A) gives you quality exposure to both industries.

The company provides measurement and testing equipment used in a host of industries, including communications, electronics, chemicals, and health care and life sciences. Profits are expected to reach a record this year, and the company’s long-term growth should exceed the growth rate of the overall economy.

Agilent shares have pulled back sharply in recent months, and are trading at a 21% discount to their 52-week high of $46.72. The price dip is providing an excellent entry point for investors who want a solid growth opportunity at a reasonable valuation.

Agilent provides testing and measurement instruments used in a variety of environments, from life sciences laboratories and wireless communications to chemical analysis and aerospace/defense. The company has broadened its product line via acquisitions in recent years, including the acquisition of Varian in 2010. Its most recent acquisition was the June 2012 purchase of cancer-diagnostics company Dako.

In addition to acquisitions, Agilent’s growth strategy hinges on creating cutting-edge products. To that end, the firm spends roughly 9% of annual sales on research and development.

Profit growth should be decent this year, with per-share profits for fiscal 2012 ending in October expected to rise 10%. Growth in fiscal 2013 should accelerate to 14%, paced by improving US economy.

The stock currently trades at 11 times the fiscal 2012 consensus earnings estimate of $3.24 per share and ten times the fiscal 2013 estimate of $3.71 per share.