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Brady Corporation: Got your ID badge right here

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Enterprise security and health and safety issues are bigger than ever and that pertains even to such prosaic items as wall signs, ID badges and warning labels. A leading provider of such goods is headquartered in Milwaukee, Wisconsin.

Brady Corporation (NYSE: BRC) provides products that identify and protect premises, products and people. Offerings include high-performance labels and signs, badges, printing systems and software, label-application and data-collection systems, safety devices, lockout/tagout products and precision die-cut components. The firm also manufactures specialty tapes and related products that are characterized by high-performance adhesives. Clients include Abbott Laboratories (NYSE: ABT), Alcoa Inc. (NYSE: AA), ConAgra Foods (NYSE: CAG), Honeywell International (NYSE: HON), Marriott International (NYSE: MAR), Texas Instruments (NYSE: TXN) and Toyota Motor Corp. (NYSE: TM).

The company pleased investors last week, when it reported Q3 EPS of 58 cents and revenues of $346.3 million. Analysts had been expecting 55 cents and $346.3 million. Management also guided FY07 EPS to $2.06-$2.15 ($2.08 consensus) and FY07 revenues to $1.35-$1.37 billion ($1.35B consensus). Robert W. Baird subsequently upgraded the shares to "outperform." The stock popped through 90-day and 200-day moving average resistance on the news and has since settled into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the shares with two "strong buys" and five "holds." Analysts expect an 18% growth rate through the next year. The BRC P/E ratio (18.89), Price to Sales ratio (1.55), Price to Book ratio (2.34), Price to Cash Flow ratio (13.65) and Sales Growth rate (39.09%) compare favorably with industry, sector and S&P 500 averages.

Institutional investors hold about 89 percent of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, BRC has traded between $30.50 and $41.55. A stop-loss of $31.50 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

Symbol Lookup
IndexesChangePrice
DJIA-223.328,280.74
NASDAQ-49.201,796.52
S&P 500-26.91896.42

Last updated: July 05, 2009: 10:53 PM

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