Intelligent Power solution leader Eaton makes a key growth-play acquisition

$ETN has a cup and handle breakout on its daily chart, that measures to a target above $379

Eaton ETN 0.00%↑ is an intelligent power management company that makes products for the data center, utility, industrial, commercial, machine building, residential, aerospace and mobility markets. They are a top 10 holding of Industrial Sector SPDR XLI 0.00%↑ and sells at over 5x revenue, with a market cap of $130 billion and 2024 revenue of $25 billion. They are already benefitting from the secular trend of strong electricity demand from data center growth due to AI and to expand their aerospace business (15% of revenue), they bought U.K. based Ultra PCS for $1.55 billion, benefitting from their high margin accretive earnings, from $240 million of revenue expected in 2025.

The daily chart of ETN 0.00%↑ shows a nice cup and handle breakout above $305 that measures to a target above $379, slightly above their November 2024 peak near $377. A/D shows accumulation, climbing higher highs the past couple of months. RSI and MACD have pulled back to consolidate, but could resume their strength printing higher highs, if the stock breaks above $340. The 50-day MA in blue is climbing and poised for a bullish golden cross above the 200-day MA in the next few weeks.

For risk mitigation, we suggest putting a stop loss below the 50-day MA and key cup and handle breakout level near $305.

A.C.