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Stock to Buy on Dips – Illinois Tool Works (ITW)

December 13, 2011 | About:

Chandan Dubey


About the author:

Chandan Dubey
I invest because I want to be free by the time I reach 40 years of age i.e., 2025. My investment style is to find a small number of bets with large margins of safety. I pay a lot of attention to management and their incentive. Ideally, I like to buy owner operator businesses. I am fortunate to have a strong inclination towards studying. I aid my financial understanding by extensive reading in psychology, economic, social sciences etc.

Rating: 3.9/5 (22 votes)


Tonyg34 - 2 years ago
one of the best managed cyclicals.

you managed to write an article on ITW without mentioning the 80/20 rule, so while you did your usual stand-up job of reviewing the company you could have beefed up the analysis a bit by digging into how the business actually operates and maintains its competitive advantage (and thus margins).

bounce in the market from 40 to 47 sure eats into the margin of safety, but a great stock to "buy on dips" as you say. They (ITW) sold their finishing businesses to Graco (GGG), who is also worth a look.
Adib Motiwala
Adib Motiwala - 2 years ago
Chandan, Good piece. I was browsing through ValueLine today and this was one of the companies that I liked in Volume 4.

Can I request you to mention stock price, share count, market cap and EV in your articles. I notice you use DCF valuation. Maybe it wont hurt to mention P/FCF or some other metrics.



Cdubey premium member - 2 years ago
Thank you tony for pointing out the 80/20 rule. I should have discussed a bit more there.

@Adib: I will keep that in mind from next time.
Alex Garcia
Alex Garcia premium member - 2 years ago
It has been a while since I looked at ITW. I remember being turned off by its growth by acquisition strategy. Anyway, I would have liked to see a "sum of the parts" valuation if the company provides the data.

Tkervin - 2 years ago
ITW is a good company and you did a good writeup. Thank you for the effort. It is appreciated.

That being said, ITW traded sub-$28 in '09. So if the market continues to roll over......this puppy has a good distance to fall. I agree with your "Stock To Buy On Dips" title, but I would wait until sub- $35.

I like to wait for the very fat pitch. If I don't get to swing at a certain be it.
Cdubey premium member - 2 years ago
Rightly said ! If it falls to $35, I will buy by truckloads ! :) Let us hope it does.

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