Wednesday, April 27, 2005

Stock Pick Corner: Tyco

Tyco International (NYSE:TYC)
Tyco is a diversified international conglomerate. Half of their revenues in 2004 were from the US and the other half were international. Tyco has a great new management team that is making this the turnaround company of the decade.

In 2005, Tyco should look to earn close to $2.00 per share. The stock currently trades at 22 times trailing earnings and 14 times 2005 earnings. Look for earnings growth between 12-20% per year for the next three years. I believe Tyco can trade at 20 times earnings and this gives me a $40.00 price target for mid 2006. Tyco just recently increased their dividend, another sign a company is growing and becoming more profitable.

What does Tyco do?
4% Revenue from Plastics & Adheseves
15% Revenue from Engineered Products & Services
23% Revenue from Healthcare
29% Revenue from Fire & Security
29% Revenue from Electronics

For more information visit the Tyco website.

Ben is currently long Tyco at the time of this post. His position may change without notice.


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