Products You May Like
We’re initiating a new position in Stanley Black & Decker (SWK), buying 100 shares at roughly $89.59 each. Following Wednesday’s trade, Jim Cramer’s Charitable trust will own 100 shares of SWK, representing approximately 0.32% of the portfolio. This global leader in hand and power tools, household hardware, and engineered fastening systems is getting called up from the Club Bullpen. We’re intentionally starting this new position on the small side given the overbought nature of the market and will look to add on pullbacks. In our Bullpen post on Monday and during Wednesday’s Monthly Meeting, we discussed how Stanley Black & Decker has been plagued over the past couple of years by too much inventory, bloated costs, and a problematic supply chain. It’s been a fall from grace for a terrific brand and a quality company with a rich history of creating value and returning cash to shareholders. Stanley Black & Decker is a dividend aristocrat, meaning it’s increased its dividend for at least 25 consecutive years. The company’s last quarterly dividend was 80 cents a share, putting its annualized yield at roughly 3.55%. With margins crunched and earnings in free fall, the company announced last July a series of initiatives aimed at generating more cost savings; prioritizing cash-flow generation and inventory optimization; streamlining and simplifying the organization; and transforming its supply chain. The company is now about one year into its restructuring plan and has already made good headway in clearing out its excess inventory and unlocking cost savings. Indeed, management’s plan will be a multiyear effort that will require some patience, especially as the home improvement market looks to find its footing after working off the Covid pandemic surge. However, the company spoke at a conference earlier this month and signaled that its tool business was tracking in line with expectations as a result of stronger-than-expected new home construction, repair, and remodeling in the United States. This stabilization in the home improvement market was reiterated Tuesday at Home Depot ’s (HD) upbeat 2023 Investor Conference. SWK YTD mountain Stanley Black & Decker (SWK) YTD performance With inventory right-sized, costs coming down, and the tools market showing signs of resilience, we believe that the setup for Stanley in the second half of 2023 through 2024 looks attractive. The company’s nasty stretch of negative earnings revisions may have finally come to an end. Stock prices tend to follow earnings estimates, so as the market gains more confidence in the company’s recovery, we would expect the stock to rally from here and work towards our price target of $100. The stock, which closed Tuesday at $88.96 per share, has gained about 18% year to date. (Jim Cramer’s Charitable Trust is long SWK. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.