With people stuck at home and using that time to fix up their houses, not to mention past strategic initiatives bearing fruit, Stanley Black & Decker (SWK) has enjoyed some exceptional growth lately in its core Tools & Storage business. Although the comps are going to get tougher, acquiring the reminder of MTD creates some longer-term, if controversial, growth and leverage opportunities, and 2021 should see some improvement in the Industrial Security businesses.
I last wrote on Stanley Black & Decker ("Stanley" from here on) in September, and at that time I thought it looked like an interesting relative value call in the industrial space. The stock has been a mediocre performer since then, doing a little better than the S&P but no better than the broader industrial group, due to what I believe may be some concerns about the durability of the growth seen in 2H'20 and rotation to other themes.
I do still find the valuation to be interesting on a relative basis, but I am concerned about sentiment given the likelihood of slowdowns in the residential and non-residential markets, as well as some ongoing risks to capex spending in oil/gas and commodity price inflation. At this point, I personally still lean positive on the shares as a longer-term holding.
Read more here:
Torrid Tool Demand Continues To Drive Stanley Black & Decker
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