Sherwin-Williams: Time to Take Some Profits off the Table?

Posted Jun 4th 2010 3:00PM by Joseph Lazzaro
Filed under: Stocks to Sell

Paint-supplier extraordinaire Sherwin-Williams Co. (SHW), first written about here on June 12, 2009 at a price of $55.10, has advanced recently, with the stock testing psychological resistance at $80 before a recent pull-back.

Further, even the outlook for Sherwin looks decent, given that the U.S. housing sector (as measured by both new and existing home sales) has likely bottomed, now may be a prudent time for those investors who can't tolerate the risk to consider taking some profits off the table with SHW. The reason? So far during this recovery, private sector job growth has been sub-par, and that may weigh on household formation and paint sales.

Those investors who can tolerate the risk can continue to maintain their full position, and go for possible greater gains.

The First Call FY2010/FY2011 EPS estimates for SHW are $4.60 to $5.35.

I'll re-evaluate Sherwin-Williams in about one month, when, hopefully, we'll have a better idea regarding the strength of the U.S. housing sector's recovery.

Stock Analysis: I consider Sherwin Williams to be a moderate-risk stock. If you purchased SHW's shares in June 2009, consider taking some profits off the table at this juncture. I'd put a sell/stop loss at: $37.

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

Tags: Sherwin-Williams Co., SHW