Company Description
Black & Decker is a leading global manufacturer and marketer of
power tools and accessories, hardware and home improvement
products, and technology- based fastening systems.
[Source: Company Press Release]
Reasons to Invest:
This week's Drip of the Week is a worldly renowned company of
which has been publicly traded on the NYSE since 1970. A quick
once over of their website and I found their vision statement,
otherwise known as the company outlook and/or objectives. They
claim that their objective is to establish itself as the
preeminent global manufacturer and marketer of power tools and
accessories, hardware and home improvement products, and
technology-based fastening systems. Care to venture any guess on
which company this is?
If this question has left you with a puzzled countenance, please
allow me to introduce Black & Decker Corp (NYSE:BDK) as this
weeks Drip of the Week. BDK looks attractive to us for quite a
few reasons. First of all, their figures and performance history
are quite impressive. Secondly, BDK announced an increase in
their quarterly cash dividend less than a month ago, and was
recently listed on the most active list for the DJ Retail Index.
A Look at the Figures
Over the first three quarters of this year, BDK's revenues rose
two percent, to $3.23 billion. Their net income increased 26% to
$193.5 million. The company reported that these figures reflect
the positive effect of the foreign currency exchange rates from
overseas business in Europe. Net income figures reflect lower
net interest expenses and the cost reduction effect. These
numbers are based on the first nine months of 2003, however I do
see the need to break down the success of BDK's third quarter
figures.
Net earnings for the third quarter were reported to be $74.4
million, or $0.95 per share on a diluted basis. This is a pretty
hefty increase when compared to the third quarter figures of
2002, which came in at $54.9 million, or $0.68 per share on a
diluted basis. You math geniuses can calculate that over the
course of one year earnings increased by $0.27 cents per share,
and net earnings increased by $19.5 million. Increases like this
are becoming more frequent with each passing day of this
improving economy, but these statistics are even more impressive
when you compare them to BDK's competitors.
Performance History
On November 3rd, 2003, BDK hit its 52-week high of 48.47, which
is 15.27 points higher than its March 12th low of 33.20. Now I
understand that most of the drips that I have listed in previous
articles have had a greater range of movement than BDK, but at
its current level I still like the stock.
Since the November 3rd high BDK has been on a downward trend.
The stock has closed lower 6 out of the past 9 trading sessions
and is currently idling between its simple 10-DMA and 50-DMA. It
seems apparent to me that since hitting its new 52-week high,
traders have taken the past few sessions to seek profits. After
all, BDK did climb 8 points in one month's time, further
convicting bullish traders to dump the stock and claim their
profits. While the MACD is giving off a sell signal on BDK I
can't help but notice that the stock is starting to consolidate
around short-term support of 45 and change. This makes me
suspect that the current dip was not caused by bearish day
traders, but rather bullish traders who were taking profits as if
to give the stock a short breather before continuing higher. The
reason I am noting this is because I suspect that at its current
level, BDK is offering a nice entry level for us long-term
investors.
Also noteworthy is the fact that BDK was listed on the DJ Retail
Index as the 5th most active in terms of volume.
Dividend Information
On October 17th, 2003 Black & Decker Corp's Board of Directors
announced that they would be increasing their quarterly dividend
to $0.21 per share, from $0.12 per share. This nine-cent
increase is even more the reason to invest in BDK as they are now
yielding a 1.83% dividend. The new dividend is payable on
December 26th, 2003 to shareholders on record by December 12th.
This provides you a few weeks to consider and investigate if BDK
is a worthy DRIP candidate for your portfolio.
Closing Thoughts
Black & Decker is quite the household name. They carry a wide
variety of products ranging from irons and toasters to heavy-duty
power tools. I like the fact that this company is so well known
and trusted by people across the globe, not to mention their
strong net earnings and revenue increases over the past year. If
this is not enough to convince you that BDK is worthy of your
portfolio, and the dividend increase doesn't entice you either,
how about thinking along the lines of what special holiday is
coming around the corner.
For instance, for Christmas my wife has already asked that I
surprise her with Black & Decker's new cordless electric can
opener, known as the "Gizmo." I suppose the world is becoming so
advanced that everyone is seeking out new devices and technology
that comes without the cords. Therefore, who would I be to say
that our regular can opener (with a power cord) doesn't need
updating? I suppose I would be in trouble if I told her that I
thought our regular old can opener works just fine! (GRIN) I
mean after all how much would we have to pay for batteries just
to power this new cutting edge can opener? Maybe next week I
will spotlight the battery company that provides these new
cordless devices with power, as they must be raking in profits
from all of this new cordless technology. Here I go ranting and
raving over a can opener that is probably worth the price when
what I really want for Christmas is a DeWalt (DeWalt is partnered
with Black & Decker Corp and DeWalt power tools can actually be
linked to from BDK's website) heavy-duty nail gun, of which won't
be very inexpensive. Not that I am trying to stereo type men as
using power tools and women as being the kitchen crusaders, but
you have to admit, BDK has a little bit of something for every
gender, further convincing me that we could see a pop over its
longer-term resistance level of 48 by the end of the holiday
season. If we do see a strong pop over this resistance level,
and the trend holds over this level, I could see BDK turning
resistance into support.
This ends another exciting episode of the DripAdvisor.com Drip of
the Week. Stay tuned next week, as we will spotlight another
stock worthy of the DripAdvisor.com limelight.
Until Next Week,
Nich Sheldon
Editor
Broker Recommendations
Strong Buy 3
Buy 3
Hold 7
Sell 1
Strong Sell 0
Brokers Covering 14
DRIP Information:
Shares to Qualify = 1
Auto-reinvestment = Yes
Accept Foreign Accounts: Yes
Temper Enrollment: Yes
Min/Max Investment = $50 to $60,000/Year
Reinvestment Fees -
Dividend investment fees: None
Cash investment fees: None
Auto reinvestment fees: $1
Transfer Agent:
First Chicago Trust
800-519-3111
Corporate Headquarters:
701 East Joppa Road
Towson, MD 21286
Phone: (410) 716-3900
Fax: (410) 716-2610
