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Could This 143-Year-Old Innovator Make You Money?

Let’s take a look at Ingersoll Rand (IR).

I know you know the name. In 1871, Simon Ingersoll invented the steam-powered rock drill, and the rest is history. Fast-forward 143 years later, the company continues to innovate and it’s a market leader.

The brands that you know are Trane, American Standard and ThermoKing.

The company’s business segments are transportation, refrigeration, industrial processing is 19% of the business, residential building is 15%. Nonresidential building, which I love right now, in North America is 29% of the business and overseas it is 18%. And I think business is going to be driven by massive macro developments, including energy consumption, urbanization, food and water security, climate change and industrial production. Margins in that climate business continue to improve, and they justify much higher valuations in the future. A close above $65 triggers the next leg up, with a target of $80. I like this one a lot, guys.

And this one is a name a lot of you should know: Net App (NTAP). It focuses on moving data across the cloud.

They also deploy flash storage, and they help grow mid-size businesses, which really are their sweet spot -- protect, recover data, also defense software. Now in the past year, business stalled somewhat, in part, because customers… well, there were spending restraints. And this production cycle has gotten a little longer, but to me, it appears to be changing.

The open network storage space, as we know, is hot -- and the hybrid cloud space is the place to be. That is where management has been focused.

The value proposition for their customers is pretty straight forward -- storage utilization is going to improve at least up to 200% and performance as much as 400%. When the top line does grow it will be fantastic. In this most recent quarter, what they were able to do without the topline growth…and expand their margins to 63.2% from 60.7%, operating margins 18.3% from 15.3%, that is huge. Now ideally, the stock should be bought right around here. If you are looking for a faster payoff and you want to buy it at a breakout point, that is a close above $38. My near-term target is $44, longer term I think this stock is going north of $50.

DISCLOSURES

Ingersoll Rand (IR)

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CHARLES N N N N
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Net App (NTAP)

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Family Owns

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Banking

CHARLES N N N N
HITHA N N N N
DANI N N N N
MATT N N N N
DAVID N N N N

 

Charles Payne is the host of Making Money with Charles Payne (weekdays 6-7 PM/ET). Click here to see more from Charles Payne.