For long-term investors, there’s nothing better than “Forever Stocks” — shares of firms that are head-and-shoulders above the competition and that are so structurally sound that you can basically own them forever.

What long-term investors like just as much is when the crowd is scared out of a Forever Stock, creating a rare opportunity to buy these high-quality shares at a reduced price.

Indeed, one the best Forever Stocks is available at an incredible bargain, with shares off sharply in the wake of a surprise second-quarter earnings disappointment. For the quarter, the firm reported earnings per share (EPS) of $1.11, missing analyst estimates by $0.02. For this, the market saw fit to beat the stock down 12%.

A 12% drop for a 2% miss may seem pretty irrational, but it doesn’t faze long-term investors. Any reason will do to get a bargain on Eaton Corp. (NYSE: ETN). This firm is a global leader in power management solutions — things like electrical, mechanical, hydraulic and drivetrain systems — for the automotive, aerospace and agricultural industries.

A few variables hindered Eaton in the second quarter. The firm paid $39 million to restructure its industrial segment, $644 million to settle longstanding legal disputes and had a $156 million taxable gain on a couple of small divestitures.

#-ad_banner-#​“Factoring in these unusual items, operating earnings per share in the second quarter were reduced by $0.70 after tax,” said Alexander Cutler, Eaton’s CEO and board chairman.

Slightly slower organic revenue growth was also an issue in Q2, and it prompted management to reduce its guidance for overall growth in 2014 to 3% from 4%.

Sure, these sorts of things can be cause for concern, but they are common, short-term obstacles. The key is to focus on the big picture and remember why Eaton is a Forever Stock. 

One such reason is its attractive and growing dividend. At $1.96 a share, dividend payments have nearly doubled since 2009, when the firm paid out $1.00 a share. What’s more, it represents a payout ratio of only 49%, which not only indicates sustainability but room for future increases. If Eaton is able to continually boost its bottom line, then the dividend could continue to rise.

Mind you, it’s probably unrealistic to expect a repeat of the torrid expansion seen from 2009 to today. During that period, earnings per share (EPS) nearly quadrupled from $1.14 to $4.03. That kind of growth might be a thing of the past, but Eaton can comfortably meet consensus projections of 11% annual EPS growth for the next five years.

You see, the firm is remaking itself. It’s evolved over the past decade from mainly a drivetrain and engine parts company to a more diversified provider of power management solutions. Eaton is even attempting to enter the rapidly growing cloud computing space.

​Cloud will not necessarily be a major revenue source for Eaton. Maybe it will, maybe it won’t. Nonetheless, the firm’s goal is to attract customers by helping them cut energy costs through more efficient usage of power sources. The takeaway: a growing focus on power management — as opposed to just providing products — can open more doors for Eaton.

For instance, the company’s lighting controls are designed to adjust the lights in a room automatically. Lights are turned off when a space is empty and they dim when natural light is strong. Technology like this can reduce energy consumption for lighting by up to 30% and improves fuel efficiency by as much as 25% in most vehicles.

With global demand to reduce energy consumption, superchargers and other products that enhance fuel efficiency should see very strong demand both domestically and abroad. Eaton is particularly keen on expanding exposure in the fast-growing Asian car markets. This market — where less than 10% of the population own a car — could be highly lucrative for Eaton.

Risks to Consider: Although Eaton has been expanding beyond automotive and aerospace, it still has substantial exposure to these highly cyclical industries.

Action to Take –> Eaton’s recent plunge is a prime chance to buy this Forever Stock at attractive valuations. Based on projected EPS of $5.34 in 2015 and a recent stock price of $69.20, shares have a forward price-to-earnings (P/E) ratio of only 13. With EPS expected to grow 11% annually for the next five years, upside is on the order of 87% to $129 a share by the fall of 2019, assuming an earnings multiple in the historic range of 19. Since management aims to raise Eaton’s dividend by 15% a year, the stock could be yielding about 3.1% at that point.

Eaton is the perfect example of a Forever Stock… but it’s not the only one. After six months and $1.3 million worth of research, my colleague Dave Forest found dozens of Forever Stocks that pay a fat dividend, dig a deep moat around their business to fend off competitors and buy back massive amounts of stock. To learn more about the Forever stocks that he unearthed — including some names and ticker symbols — click here.