Top Picks 2018: Stanley Black & Decker (SWK)

01/05/2018 5:00 am EST


Jason Williams

Assistant Editor, Wealth Daily

Stanley Black & Decker (SWK) — our conservative pick for 2018 — is most commonly known for its hand and power tool lines. But it’s so much more than just tools, notes growth stock expert Jason Williams, editor of Wealth Daily.

Stanley provides security, storage, and industrial fasteners, too. It has the best margins in the business at 12.88% operating margin and 9.79% profit margin. And it’s been at the top of the heap for years now — that doesn’t happen by accident.

It also has a healthy dividend yield of 1.52% — that’s $2.52 per share per year. It’s not a high yielder, but with a payout ratio of only 30%, it has lots of room to grow payments.

And while it might not be the most exciting company, the gains it’s seen in 2017 are. The company was up over 47% as of December 20, 2017, and it has a lot more room to run.

Management at Stanley is dead set on doubling revenue by 2018 — that’s from $11 billion. It’s no small feat, but the company is well on its way to achieving its goal.

Management has been executing a growth-by-acquisition strategy and has been aggressively scooping up smaller companies that fit into its repertoire.

From the Craftsman brand that Stanley acquired from Sears in early 2017, energy storage companies, and drone surveillance, Stanley’s building up its market share at a rapid clip.

And combined with organic growth in all of its three major segments, this is translating into some serious stock price appreciation.

I’m seeing this company heading up at least another 50% in 2018 — potentially even higher as the cost synergies and additional revenue from its acquisitions in 2017 continue trickling down the income statement.

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