Illinois Tool Works (NYSE: ITW $58) has been picked by Standard & Poor’s Equity Research as its Focus Stock of the Week. ITW carries S&P’s highest investment recommendation of 5-STARS, or Strong Buy.
“We believe Illinois Tool Works will post strong organic growth in both 2011 and 2012,” said Mathew Christy, Industrials Equity Analyst at Standard & Poor’s Equity Research. “This belief is based on the company’s leverage to global economic growth and industrial activity, both of which we see experiencing further expansion. In our view, the company’s diversified industrial product platform will likely witness continued growth across its business segments while volume throughput leads to margin improvement.”
Christy also thinks that strategic initiatives will help drive future growth and margin expansion for ITW. For example, he views favorably the company’s shift and focus toward expanding sales in a number of high-growth emerging market regions, including China, India, Brazil, and Russia. “The company has altered its decentralized business model in recent years and has centralized some operations, such as product innovation and the sharing of product ideas across its segments, which we think will speed new product development and widen margins,” said Mr. Christy. “Lastly, ITW plans on expanding a number of new product platforms via organic growth and acquisitions.”
To view a video of Mr. Christy discussing ITW, paste the following link into your browser.
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