It's up, up and away with SWK

New Britain, Conn.-based Stanley manufactures tools for professional, industrial, and consumer use, and has built a business model that's been successful for more than a hundred years. A security solutions unit accounts for about 30% of revenue, but the key revenue driver here is tools: hammers, screwdrivers, pliers, saws, and measuring tape, among other products.

The First Call FY2009/FY2010 EPS estimates for SWK are $2.36 to $2.84, but the latter will likely be revised upward. IIs sense this, which is why Stanley's stock chart has consistently remained above the key 50-day moving average in 2009, save for one, constructive correction this summer. (SWK had raced to about $40 from $23 prior to the correction.)

Hence, if you can tolerate moderate risk, now is the time to get on board Stanley's train, which is headed north $60 per share by the end of 2010.

Stock Analysis: Stanley Works is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in SWK now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your SWK position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $22.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.