bdk

Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and who have a competitive advantage in established markets, preferably with a favorable global trend as a support. And with the above in mind, Black & Decker is worth a review.

The Black & Decker Corporation (NYSE: BDK) is a global manufacturer and marketer of power tools and accessories, hardware, home improvement products, and fastening systems.

In general, analysts like BDK's recent restructuring to improve productivity and operating margins. For the most part, analysts are forecasting low-single-digit sales growth for 2008 and 2009, weighed down by the housing sector's doldrums.

It is alarming to me that the same people who screw up the economy (or stand by watching) are the ones that are now promoting the remedies. They have proven without a shadow of a doubt that this is not their strong suit. The proposed economic stimulus package has bi-partisan support and calls for an estimated $156 billion of tax rebates ranging from $500 to $1,000 (+ $300 for each child) that might show up in May.

If we are going to add on to our already humungous joke of national debt, than I want to invest this capital in something that will bring a higher return on invested capital (ROIC) than the paltry one time mad money. That expenditure should be for national infrastructure projects like roadways, bridges, tunnels, and waterways.

We have all heard about the poor condition of our national infrastructure and the hundreds of billions of dollars of repair work and replacement that is desperately needed.

This alternative would bring visible results that every single person in the country would benefit from and improved linkages always stimulate economic growth. Road improvements even reduce fuel consumption by shortening routes and reducing friction both strategically and physically.

TheStreet.com's Jim Cramer says these are the stocks that you should watch.

Some stocks have just been totally given up on, as if nothing good can ever happen to them. Check out Masco (NYSE: MAS) (Cramer's Take) , for example. Masco's a great company, always has been -- a dominant supplier to the housing industry, both remodel and original. This company, which MAKES money, is selling at almost a 5% yield and no one cares.

Or how about Fortune Brands (NYSE: FO) (Cramer's Take)? It has a terrific housing component -- dominant player -- and one of the best spirits businesses. We found out from Diageo (NYSE: DEO) recently that they have a great business in spirits, and the company may be on the verge of getting Absolut, a fantastic brand. The stock trades at an amazingly low multiple. Or consider Black & Decker (NYSE: BDK) (Cramer's Take) , one the great innovators with a classically pro-shareholder bias.

These companies are making good money in the worst environment imaginable. They have decent balance sheets. When this period ends, they will be dominant players, taking share from everyone.

The market's recent pullback has created several moderate-risk, bargain-basement-price stocks, and one worth an evaluation is Black & Decker.

The Black & Decker Corporation (NYSE: BDK) is a global manufacturer and marketer of power tools and accessories, hardware, home improvement products, and fastening systems.

Analysts expect BDK's recent restructuring to improve productivity and operating margins. In general, analysts are forecasting low-single-digit sales growth for 2008 and 2009, weighed down by the housing sector's doldrums.
Meanwhile, BDK's fastening/assembly unit business should improve somewhat, offsetting housing's likely sub-par performance, and register mid-single-digit sales growth. The Reuters FY 2008/FY 2009 EPS consensus estimates for BDK are $1.14 to $1.57.

The earnings crunch is in full swing, and here are a few of the highlights of this past week's earnings coverage from BloggingStocks:

• American Express Co. (NYSE: AXP) reported a slip in profits and warned of slow growth in 2008.
• Alberto-Culver (NYSE: ACV) returned to profitability after a spin-off and restructuring.
• Avnet Inc. (NYSE: AVT) beat expectations and offered a revised forecast.
• Black & Decker Corp. (NYSE: BDK) beat expectations but lowered its outlook due to the housing slump.
• Eastman Kodak Co. (NYSE: EK) fell short of earnings estimates, sending shares lower.
• Hershey Co. (NYSE: HSY) responded to disappointing results by announcing price increases.
• Kraft Foods Inc. (NYSE: KFT) fourth-quarter profit fell on higher costs for raw materials.
• Lenovo Group Ltd. (OTC: LNVGY) nearly tripled quarterly earnings on strong demand for PCs in Asia.
• MasterCard Inc. (NYSE: MA) beat expectations, even after excluding a one-time investment gain.
• McCormick & Co. (NYSE: MKC) posted solid results on strength in international markets.
• McDonald's Corp. (NYSE: MCD) beat expectations, but reported flat same-store sales in December.
• Procter & Gamble Co. (NYSE: PG) reported strong second-quarter results on strength in emerging markets.
• SanDisk Corp. (NASDAQ: SNDK) reported a profit but missed revenue expectations.
• Sherwin-Williams Co. (NYSE: SHW) missed estimates and lowered expectations for the next quarter.
• 3M Co. (NYSE: MMM) beat expectations despite a decline in profits.
• Tyson Foods Inc. (NYSE: TSN) profits fell and it announced a plan to raise prices.
• Verizon Communications Inc. (NYSE: VZ) met earnings estimates but fell short of revenue expectations.

For additional BloggingStocks earnings highlights, see Yahoo!, Google, Amazon, Countrywide, Merck, UBS and others and Exxon, Boeing, Halliburton, Sony, UPS, Honda and others.

TheStreet.com's Jim Cramer says if we're flat or down ahead of the right Fed action today, several sectors will take off.

Every rate cut matters now. We are in that zone where money in can overwhelm existing stocks and move them up simply because there hasn't been a lot of new supply -- ex banking preferreds -- and the buybacks kick in.

Let's take the homebuilders. As crazy as it was, the homebuilders bought a huge amount of stock back, and the supply is unusually low. That means you get exaggerated moves as that money comes in from the sidelines.

Same with stocks like Whirlpool (NYSE: WHR) (Cramer's Take) or Black & Decker (NYSE: BDK) (Cramer's Take), where just a little bit of buying seems to move the stocks absurdly.

I think much of this is a function of money not getting a good return on the sidelines, and we see that the shrunken floats actually work.

Black & Decker Corp. (NYSE: BDK) posted this morning a fourth-quarter profit, excluding items, of $67.4 million, or $1.06 a share, ahead of analyst estimates of $1.03 per share. BDK shares are trading lower today, however, as the company also projected lower earnings for 2008, saying it doesn't expect a housing recovery in 2008. BDK now expects earnings of $1.10 to $1.20 per share for the first quarter, while analysts were expecting $1.40 per share. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on BDK.

After hitting a one-year high of $97.01 in July, the stock hit a one-year low of $63.35 earlier this month. This morning, BDK opened at $65.65. So far today the stock has hit a low of $65.65 and a high of $68.54. As of 10:15, BDK is trading at $67.80, down $2.18 (-3.1%). The chart for BDK looks bearish but improving slightly, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

TheStreet.com's Jim Cramer says the poor outlook for this economy has stemmed the flood of takeovers from abroad we'd normally see in this kind of market.

Where are the Europeans? Where are the Asians? Where are the Middle Easterners? Are they all cowed into not buying our companies despite the decline in the dollar?

Consider that there have been only two deals above $10 billion this year: AstraZeneca (NYSE: AZN) (Cramer's Take), which bought Medimmune for $15 billion, and Saudi Basic Industries, which purchased GE Plastics for $12 billion. No one has taken advantage of the astounding decline in the U.S. dollar to buy up enterprises.

Take two that seem absurdly low: Whirlpool (NYSE: WHR) (Cramer's Take) and Black & Decker (NYSE: BDK) (Cramer's Take). Both companies have bought in an immense amount of stock. Both companies now trade at $5 billion in value. Give them a 25% haircut and you can see how much these name-brand companies are marked down.

But nobody cares.

Just another Friday the 13th. Right? Like those odds? Let's see...


SPRINT NEXTELCORPORATION (NYSE: S)

Here's a talked about possible takeover target that deserves attention. The customer is always right, right? Not here. Complain about a problem, don't get results, complain some more, and bam!, they cut you off. That's right. Ask the first lucky 1,000 complainers-soon-to-be-former customers if they're happy with their new carrier. Bet they are. What this company needs is a new leader. And don't forget Mr. Gary D. Forsee, chairman, president and CEO, what goes around, comes around. Time to hand those triple titles over to new management and move out of the way. What a country.


MOTOROLA INC (NYSE: MOT)

Being number two not good enough? How about number three? It hasn't hit the newswire yet, but don't be surprised if Edward J. Zander, chairman and CEO, is pushed out. Another case of bad customer relations? Sure is. First falling behind Nokia Corporation (NYSE: NOK), and now Samsung, is a matter of a lack of sales in a booming wireless market. No easy fete, that. The company is losing money, shaking the management tree, and firing employees in droves. And they have no new phone coming out of the pipeline. The question is: When does Mr. Zander get his number called?



STILL FLYING AROUND


WADDELL & REED FINANCIAL INC (NYSE: WDR)

Is a private equity firm interested in this investment products company? Since last month, when Nuveen Investments Inc (NYSE: JNC) was sold to Madison Dearborn Partners, Waddell & Reed has been the subject of a buyout. The speculation hasn't gone away, and the stock continues to trade near its 52 week high of $27.80.

TRAVELZOO INC (NASDAQ: TZOO)

The talk of a sale gets louder.


BUZZ


FedEx Corporation (NYSE: FDX): Takeover talk continues as the stock climbs...Under Armour Inc (NYSE: UA): Will the next Nike Inc (NYSE: NKE) be bought?...BEA Systems Inc (NASDAQ: BEAS): Have they hired an investment banker to explore their options?...The Black & Decker Corporation (NYSE: BDK): Trading is trading near its 52 week high on word that it may be a takeover target...The E.W. Scripps Company (NYSE: SSP): Could they spin off their cable assets?

MOST NOTEWORTHY: RadioShack Corp (RSH), Visual Sciences (VSCN), Alcan (AL), U.S. Celluar (USM) and Westwood One (WON) were today's noteworthy downgrades:

• Banc of America downgraded shares of RadioShack (NYSE: RSH) to Sell from Neutral and lowered their target to $18 from $26 as they believe cuts to labor costs and advertising expenses will make it more difficult to overcome declining wireless trends.

• Friedman Billings cut Visual Sciences (NASDAQ: VSCN) to Market Perform from Outperform on valuation. Citigroup downgraded Alcan to Hold from buy on the acquisition news.

• Soleil cut U.S. Celluar (AMEX: USM) to Sell from Hold on valuation.

• Westwood One (NYSE: WON) was downgraded to Sell from Hold at Citigroup based on management distractions and weak fundamentals...

OTHER DOWNGRADES:

• Cowen removed ImClone Systems (NASDAQ: IMCL) from its Focus List, as the firm believes Erbitux is now more in line with consensus but said financials remain uninspiring.

• Merrill cut Allstate (NYSE: ALL) and Black & Decker (NYSE: BDK) to Neutral from Buy.

• USB downgraded Frontline (NYSE: FRO) to Reduce from Neutral.

• Matrix cut Thor Industries (NYSE: THO) to Sell from Strong Buy.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

When you are in the industrial supply business, the competition is ubiquitous and differentiating yourself presents a particular challenge. There is a firm in in Melville, New York that solves the problem by stocking over a half a million products and guaranteeing same day shipment.

MSC Industrial Direct Co. (NYSE: MSM) markets a range of industrial products that includes cutting tools, measuring instruments, tooling components, fasteners, plumbing supplies, electrical supplies, flat stock, raw materials, abrasives, hand tools and power tools. Suppliers include 3M (NYSE: MMM), Black & Decker (NYSE: BDK), Dow Chemical (NYSE: DOW), Eaton Corporation (NYSE: ETN), Goodyear Tire & Rubber (NYSE: GT), Honeywell International (NYSE: HON) and Kimberly-Clark (NYSE: KMB). The company serves nearly 350,000 customers, via a master catalog, supplemental publications, telemarketing and the internet.

The firm surprised the Street late last month, when it reported solid Q3 numbers and guided Q4 estimates above consensus Street views. The share price popped on the news and has since been consolidating the gain in a bullish "pennant" pattern. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the issue with four "strong buys," three "buys," one "hold" and one "sell." Analysts see an 18% average annual growth rate, through the next five years. The MSM Sales Growth rate (32.27%), EPS Growth rate (26.00%), Return on Assets (17.72%), Return on Investment (20.86%) and Return on Equity (15.57%) compare favorably with industry, sector and S&P 500 averages. Institutions own about 69% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $37.23 and $56.91. A stop-loss of $49.75 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

MOST NOTEWORTHY: This morning's noteworthy initiations included Nokia Corp (NOK), Fortune Brands, Inc (FO), Whirlpool Corp (WHR), Dick's Sporting Goods, Inc (DKS), Kona Grill, Inc (KONA):

• JP Morgan started Nokia Corp (NYSE: NOK) with an Overweight rating, believing the handset market is strong and expects gross profits to rise in 2007.

• Soleil wants to wait on the sidelines of Fortune Brands Inc (NYSE: FO), initiating shares with a Neutral rating, given the potential acquisition of Sweden's V&S Group along with the softness in the home and hardware segment.

• Soleil also started Whirlpool Corp (NYSE: WHR) with a Hold rating based on valuation, which they believe reflects the company's outlook through 2009.

• Nollenberger expects Dick's Sporting Goods (NYSE: DKS) will continue to outperform its peers, starting shares off with a Buy rating, and believes the recent pullback provides a compelling buying opportunity.

• KeyBanc is positive on Kona Grill's (NASDAQ: KONA) differentiated brand, compelling unit economics, positive SSS opportunity and growth, starting shares with a Buy rating...

OTHER INITIATIONS:

• Ceva, Inc (NASDAQ: CEVA) was initiated at CIBC with a Sector Outperform rating.

• Black & Decker Corp (NYSE: BDK) and Briggs & Stratton Corp (BGG) were initiated with Hold ratings at Soleil.

• La Jolla Pharmaceutical Co (NASDAQ: LJPC) was started with a Sell rating at Lazard.

• Aviza Technology, Inc (NASDAQ: AVZA) was initiated with a Hold rating at Needham.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Salesforce.com, Inc (CRM), Black & Decker Corp (BDK), GenVec, Inc (GNVC) and RightNow Technologies (RNOW) were today's noteworthy initiations:

• With customers wanting an alternative to Microsoft (MSFT), Salesforce.com (NYSE: CRM) is making an attempt to be that alternative. It is rumored that management is in talks with Google (GOOG) about the two companies working together, a move that could include offering Google Apps via the AppExchange and integrating more closely those apps with Salesforce.com. Baird initiated shares of Salesforce.com with a Neutral rating and $49 target.

• Banc of America sees major headwinds from declining construction and slower consumer spending on housing and started shares of Black & Decker Corp (NYSE: BDK) with a Sell rating and $85 target.

• Merriman sees upside from strong mid- and late-stage clinical programs, key collaborations and potential for revenue generation, starting shares of GenVec (NASDAQ: GNVC) with a Buy rating.

• Baird finds Rightnow Technology (NASDAQ: RNOW) to be well-positioned within the customer service segment of the CRM market with above average L-T prospects and views the recent uncertainty as a buying opportunity. Baird started shares of RightNow with an Outperform rating and $19 target...

OTHER INITIATIONS:

• Jefferies initiated RadNet Inc (NASDAQ: RDNT) with a Buy rating.

• Lehman started Mobile Mini, Inc (NASDAQ: MINI) with an Equal Weight rating.

• Northwest Airlines Corp (OTC: NWACQ) was initiated with a Neutral rating at Goldman.

• Pacific Growth started shares of Javelin Pharmaceuticals Inc (AMEX: JAV) with a Buy rating.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

If you extrapolated the awful results from homebuilders and construction suppliers and applied it to The Black & Decker Corporation (NYSE: BDK), you were wrong -- BIG TIME.

Black & Decker's stock was up over $5 in after-hours trading on blow-out earnings results last night. How did this happen?

Nolan D. Archibald, Chairman and Chief Executive Officer, said, "The Power Tools and Accessories segment benefited from strong international performance and favorable order patterns in the U.S. As a result, we expect to report first-quarter sales and earnings significantly above the guidance we issued in January."

Black & Decker cut its earnings forecast a number of times last year as slowing construction dampened demand for its products. In January, Black & Decker said it expected sales and earnings to decline in the first half of 2007. However, its orders have stabilized and large customers began a modest restocking of its products. Very Interesting!

Black & Decker's result might portent good things for the two big box retailers -- Home Depot Inc (NYSE: HD) and Lowe's Companies Inc (NYSE: LOW). In the most recent conference call for the do-it-yourself companies, despite reporting horrific results, management suggested the worst of the downturn would end in the first half of 2007. Black & Decker's results might support their claim.

"However, we continue to anticipate a challenging economic environment. Therefore, we only expect to increase our full-year EPS guidance slightly when we report first-quarter results later this month," Archibald added. Sounds like a cover your bases type of statement.

Home Depot and Lowe's have become very cheap stocks. Black & Decker stock had a big run last night. Maybe the big-box retailers are set to do the same.

With the hoopla surrounding the Blackstone Group IPO filing, we are learning about the background of the firm's management. Of course, the most fanfare is for Stephen A. Schwarzman, the firm's CEO and Chairman. Another is Jonathan Gray, who is the co-head of the real estate operation. He was the mastermind on the Equity Office Properties buyout. Other notables include Hamilton James, who is the COO, and J. Tomilson Hill, the vice chairman.

Yet, we have heard little about Blackstone's co-founder, Peter G. Peterson. Then again, he's 80 years old and his title gives one the sense that he's likely not taking an operational role – Senior Chairman.

Then again, over 20 years ago, he saw lots of potential in Schwarzman and invested $200,000 with him to form Blackstone.

And, Peterson's network was a huge help.