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John O'Connell, CFA Stanley Works, The SWK-N PAST TOP PICK Nov 22, 2019

(A Top Pick Dec 13/18, Up 35%) It’s being beaten up by the tariffs since they make tools. It continues to fight through it and slow economic growth. It’s still a cheap company that can be a huge winner. A well run company that you can still buy today.

John O'Connell, CFA

Owned

Unlock Rating

$157.280

Stock price when the opinion was issued

misc industrial products

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BUY ON WEAKNESS

Watch for a pullback in the DIY Bull market leading up to the Nov. 3 vote: They just reported a strong quarter. Will benefit from the current home-improvement bull market. Undeservedly is up only 5% YTD.

BUY

Before they guided 4% organic growth today, but today raised it to 10% for the quarter ending December. It rallied only under 2% today. That's crazy. This has more room to run.

BUY

Like Home Depot, SWK is still worth buying home improvement stocks like this despite a big run-up. People will continue to spend on their homes, seeing it as an investment, not as an expense.

BUY

Something's wrong with the market this earnings season--a company reports great numbers, but the market shrugs because she stock has already roared. This happened to SWK which posted a monster earnings beat including 31% organic growth and raised their full-year earnings broadcast. Shares initially fell till it fell to 19x the midpoint of its new earnings. This is a steal.

BUY

One of the best run industrial companies in the US. Multinational, continues to consolidate, highly innovative, pandemic tailwinds. Great long-term, secular growth story. Trump tariffs hurt them, as well as the weaker USD. Trades at 18x earnings, a good time to buy.

TOP PICK

incorrect PT given Trades around 14x earnings. A long-term grower. Its dividend for the last 5 years has been growing 5% annual with overall growth even higher. You should be earning 15% returns annually looking forward.

BUY ON WEAKNESS

There's decent support at $170. The stock has come off in recent months. Wait for a Sept/Oct pullback to $160. SWK offers good value. Last September, the S&P was down 10%, so we are overdue for a meaningful pullback, if we get one. A 5-10% pullback is a buying opportunity.

BUY

The stock is getting crushed because of supply shortages. He has faith in it and will stay with it, because there remains tremendous demands for tools to fix the house. Also, the home office is here to stay and hybrid work will become permanent.

BUY

Still likes it. Today it sold its low-margin, security business. Demonstrates very strong portfolio management. Accelerating stock buyback program, which will help boost earnings. Focus on growing global tool business. Well financed and managed. Innovative.

SELL

Just sold it (down 49% this year). All the catalysts have gone: housing is slowing and rates are rising. He likes the company, but this will be dead money for a while. End demand isn't there.

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John O'Connell, CFA Stanley Works, The SWK-N PAST TOP PICK Nov 22, 2019

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