Ingersoll-Rand PLC (IR): A Contrarian Idea That’s Worth a Look

On the capital allocation side, Tyco International Ltd. (NYSE:TYC) will continue to focus on bolt-on acquisitions ($200 million to $300 million would be on the larger deal side), a dividend payout in the 30% to 35% range, and share buybacks.

Many don’t know that Stanley Black & Decker, Inc. (NYSE:SWK) has a security segment. This is because its performance has been overshadowed by the stellar results of its construction and do-it-yourself (CDIY) segment. The segment generated revenue of $599 million, which increased 1.2% versus 1Q 2012, beating the estimate of $588 million. Growth of 1% from acquisitions and 1% from favorable currency-rate movements were partially offset by a 1% organic decline.

Organic growth of 3% in the North American convergent security division and 5% in the mechanical-access security segment was offset by a 5% decline in the European Convergent Security Solutions business.

Overall, the stock remains a buy given that the bright future prospects of the CDIY segment will help the company to offset any weakness in its security business given that non-res construction continues to display sluggish growth.

Final word

Ingersoll is definitely worth a look given its potential to expand its market share globally. Its increased focus toward HVAC and the industrial segment and its shareholder-friendly approach are expected to help the stock to climb higher.

The article A Contrarian Idea That’s Worth a Look originally appeared on Fool.com and is written by Zain Abbas.

Zain Abbas has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Zain is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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