The business plan at Illinois Tool Works (NYSE:ITW) may not be the most exciting, but management deserves a great deal of credit for running this business with a high degree of discipline and focus. Illinois Tool Works knows what it does well and intends to keep pushing the boundary on how well it can do it. Although that means that this company will seldom ever be the "flavor of the month", the company's strong operating track record and free cash flow generation make it a potential core holding at the right price(s).
To me, Illinois Tool Works looks priced more or less on par with 3M (NYSE:MMM) in terms of likely returns, and both are more expensive than Honeywell (NYSE:HON). Management's growth goals are ambitious, but not unreasonable, and are predicated on continuing on with what it already does well (… but just doing it a little better). As I wrote recently with 3M, I'd be more or less okay with holding Illinois Tool Works today in a long-term portfolio, but the valuation is high for what I like to see in new buys.
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Illinois Tool Works Running Like A Machine