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Wll ABB Continue Gaining Strength?

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ABB Ltd. (ABB - Free Report) has been on uptrend since the beginning of February, with shares rising 3.2% in the month reflecting investors’ enthusiasm about its developments so far.

Among others, ABB received a contract worth $56 million from the power transmission utility company, Power Grid Corporation of India Ltd. The scope of the contract requires ABB to provide core power products including switchgear and transformers.

The company will be offering two types of ultrahigh voltage single-phase shunt reactors: 26 units of 80 MegaVolt-amperes-reactive (MVAr) and 10 units of 110 MVAr, 765 kiloVolt (kV). These transformers and shunt reactors will be deployed at four upcoming substations in southern and eastern India.

These substations, when functional, would significantly strengthen India’s power transmission grid. ABB’s expertise in providing similar turnkey solutions would aid it to fulfill the requirements of this project.

Prior to this, the company received a similar contract valued at $60 million from Canada’s power utility company, Hydro-Québec for upgrading its power grid. The company received another $55 million contract from Dudgeon Offshore Wind Ltd. to supply an underwater power cable system for a wind farm in Norfolk. Moreover, this month, ABB collaborated with Shenzhen BYD Daimler New Technology Co., Ltd. (BDNT) to provide direct current fast chargers for electric vehicles in China.

These strategic contracts would strengthen the company’s business, especially its Power Products segment which reported merely 1% sales growth in terms of local currency in the last reported quarter (fourth-quarter 2013).

Going forward, the company’s operational performance is likely to be bolstered further by the growing global demand for industrial and power distribution, along with increasing investment in power transmission solutions. These, in turn, are expected to fortify its financial position in the coming quarters.

Moreover, as per the sources, ABB is actively pursuing divestment opportunities to streamline its product portfolio and increase focus on core businesses.

However, this Zacks Rank #5 (Strong Sell) diversified industrial has not seen any upward estimate revisions over the past few weeks. The latest price appreciation is certainly encouraging, but make sure to keep a close watch of this firm in the near future before investing in it.

Some better-ranked stocks that are worth considering at the moment include AECOM Technology Corp. (ACM - Free Report) , Quanta Services Inc. (PWR - Free Report) and EnerSys (ENS - Free Report) . All of these have a Zacks Rank #2 (Buy).

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