May 13, 2011
Written By Gregory Spear
From The Spear Report: “Illinois Tool Works, Inc. (ITW – yield 2.30%) is a diversified industrial manufacturer with a hefty global footprint. The company, which operates 800 businesses in 57 countries, is a pick and shovels play on the global growth story. Its chief competitor, Dublin-based Cooper Industries (CBE), has moved well into new high territory and we expect the same from ITW. ITW’s key businesses include automotive, industrial packaging, welding and electronics, food equipment, construction, polymers and fluids and decorative surfaces.
“Overall, ITW employs more than 60,000 people worldwide. The company’s revenues totaled $15.8 billion in 2010, which means ITW is selling for about 2X sales. Additionally, more than half of these sales were generated outside of the U.S. In the most recent reported quarter, ITW’s profit jumped 57% to 91 cents a share on a 17% revenue surge to $4.4 billion (12% was organic). Interestingly, the company’s construction business grew more than 8% during a lackluster period for the industry. Despite rising input costs, gross margin held steady. ITW is benefiting from the rebound in auto and truck production, as well as welding. ITW is acquisitive. The company did six deals in Q1 worth about $500 million and brought in $329 million in acquired revenue. Last year, ITW acquired 24 companies. … Shares are breaking out to new all-time highs on hefty volume. This is an attractive time to buy.”
Gregory Spear, The Spear Report, April 29, 2011