Today's research recommendation is on Illinois Tool Works (ITW). This company has increased its dividend at least 42 consecutive years in a row. According to Mergent's Online, "Illinois Tool Works is a manufacturer of industrial products and equipment. Co. has eight business segments: Industrial Packaging that produces steel, plastic and paper products; Power Systems & Electronics that produces equipment and consumables related with power conversion; Transportation that produces components for transportation-related applications; Construction Products that produces tools for construction applications; Food Equipment that produces commercial food equipment; Decorative Surfaces that produces decorative surfacing materials; Polymers & Fluids that produces adhesives and sealants; and All Other, which produces products such as plastic packaging and metal fasteners."
When looking at the last Valueline report dated March 21, 2008 you can see that ITW's stock price is projected to conservatively increase 17% annually through 2013. Valueline also indicates that ITW normally trades at 13.5x cash flow. Currently, ITW is trading, based on 2007 cash flow, at 11x cash flow. If Valueline's price/cash flow projections are correct ITW is projected to trade up to 63.45 at minimum. The last time ITW traded above the 13.5x cash flow was back in 2004. After it's most divergent fall below the mean the stock may be poised for its next move higher.
An interesting characteristic about ITW is the steady decline in shares outstanding since 2003. At it's peak, ITW had 617 million shares outstanding. As of Dec. 2007, ITW had only 530 million shares outstanding. Along with the reduction of shares there has been a steady year over year increase in earnings since 2001. What this translates into is greater per share earnings and even greater value for the company. However, we must be aware of the company taking on too much debt either to buy back shares or expansion. Currently ITW has total debt at $2.9 billion with long term debt at $1.8 billion.
With ITW at 50.34 a share the stock is 12% above it's 1 year low and could be researched further as your next dividend achiever investment. Touc.
When looking at the last Valueline report dated March 21, 2008 you can see that ITW's stock price is projected to conservatively increase 17% annually through 2013. Valueline also indicates that ITW normally trades at 13.5x cash flow. Currently, ITW is trading, based on 2007 cash flow, at 11x cash flow. If Valueline's price/cash flow projections are correct ITW is projected to trade up to 63.45 at minimum. The last time ITW traded above the 13.5x cash flow was back in 2004. After it's most divergent fall below the mean the stock may be poised for its next move higher.
An interesting characteristic about ITW is the steady decline in shares outstanding since 2003. At it's peak, ITW had 617 million shares outstanding. As of Dec. 2007, ITW had only 530 million shares outstanding. Along with the reduction of shares there has been a steady year over year increase in earnings since 2001. What this translates into is greater per share earnings and even greater value for the company. However, we must be aware of the company taking on too much debt either to buy back shares or expansion. Currently ITW has total debt at $2.9 billion with long term debt at $1.8 billion.
With ITW at 50.34 a share the stock is 12% above it's 1 year low and could be researched further as your next dividend achiever investment. Touc.
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