Stanley Works Remains in an Uptrend
June 21st, 2011 | by Alexander Zepps |
The stock of Stanley Works (SWK), which I first discussed here on February 10, 2009, at $32.48, continues to power higher, dusting $70 psychological resistance and testing $77 before a recent pullback. If you haven’t already, now may be a good time to consider taking some profits off the table, if you’re in near $32.
However, those investors who can tolerate the risk can maintain their full position in SWK, as more upside is likely ahead.
With Stanley’s March 2010 acquisition of Black & Decker complete, look for 2011 sales to surge 20% to 22%, including organic growth of about 6% to 9%. In 2012, revenue should rise 7% to 10%.
Also, rare is the day you will find a steadier performer than New Britain, Conn.-based Stanley Works. Tool and hardware manufacturer Stanley is sort of a microcosm of the industrial ascension of the United States. Stanley is a low-profile, highly productive manufacturer of tools and hardware for consumer and industrial use: hammers, screwdrivers, saws, pliers, wood planes and measuring tape, etc. The craftsmanship and durability of it products is renowned.
What’s more, a better than 40% international revenue component means Stanley has a strong presence in key, faster-growing emerging markets. All three units — hand tools, power tools and accessories — should perform well as the global economic expansion continues.
The Thomson Reuters First Call FY2011/FY2012 EPS estimates for SWK are $4.94 to $6.03. Each estimate looks about 5% low, according to my analysis.
Technically, as noted, SWK has been in a nine-month uptrend, and there is scope to $80 and beyond.
2011 Outlook: I view Stanley as a long-term play, but if you’re looking to sell SWK within the year, it’s probably best to take your profits after it rises to $86 to $89, if it fails to clear $90.
Stock Analysis: I consider Stanley Works to be a moderate-risk stock. If an investor has already purchased the company’s shares, I’d hold them. If not, I’d consider buying a 50% position in SWK now. I’d put a sell/stop loss at $47.
Tags: Stanley Works, Works
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