It goes without saying that this market remains a market for the bold only. There are some 'greens shoots' sprouting in the economy, to cite a phrase popularized by Fed Chairman Ben Bernanke, but there still are formidable problems. That said, no one ever made a dime by establishing stock positions when things were 99% safe: by that time, almost every stock has been bid-up. You have to prudently-bottom fish, and with this in mind, Black & Decker (NYSE: BDK) is worth a review.
Black & Decker is another one of those stocks that was rudely treated by the markets. A global manufacturer and servicer of power tools and accessories, sales are expected to decline about 15-20% in 2009, after a roughly 7% decline gain in 2008. With those sequential metrics, Wall Street naturally took shares down...about 70%, from about $70 to the $20-range. Talk about haircuts. The First Call F2009 / F2010 EPS estimates for BDK are $1.81 / $2.51.
BDK's shares have recovered to about $35, but analysts remain concerned about domestic and international macroeconomic headwinds; and the U.S. housing sector, pivotal for the tool industry, is not likely to begin to recover before Q3. Still, the view from here argues that any signs of renewed growth in the global economy will be pure upside for the company and while it's not time to 'back up the truck' with BDK, the risk / reward warrants squirreling-away a few shares now.
Stock Analysis: Black & Decker is a moderate-risk stock. Consider buying a 25% position in BDK now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your BDK position in the first half of 2009. Sell / Stop Loss if you were to buy shares in this company: $17.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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