Stanley Works Remains in an Uptrend

With Stanley's March 2010 acquisition of Black & Decker complete, look for 2011 sales to surge 20% to 22%, including organic growth of about 6% to 9%. In 2012, revenue should rise 7% to 10%.

Also, rare is the day you will find a steadier performer than New Britain, Conn.-based Stanley Works. Tool and hardware manufacturer Stanley is sort of a microcosm of the industrial ascension of the United States. Stanley is a low-profile, highly productive manufacturer of tools and hardware for consumer and industrial use: hammers, screwdrivers, saws, pliers, wood planes and measuring tape, etc. The craftsmanship and durability of it products is renowned.

What's more, a better than 40% international revenue component means Stanley has a strong presence in key, faster-growing emerging markets. All three units -- hand tools, power tools and accessories -- should perform well as the global economic expansion continues.

The Thomson Reuters First Call FY2011/FY2012 EPS estimates for SWK are $4.94 to $6.03. Each estimate looks about 5% low, according to my analysis.

Technically, as noted, SWK has been in a nine-month uptrend, and there is scope to $80 and beyond.

2011 Outlook: I view Stanley as a long-term play, but if you're looking to sell SWK within the year, it's probably best to take your profits after it rises to $86 to $89, if it fails to clear $90.

Stock Analysis: I consider Stanley Works to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 50% position in SWK now. I'd put a sell/stop loss at $47.

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