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Could Stanley Black & Decker Stock Bounce Back?

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Stanley Black & Decker’s stock performance in 2018

Stanley Black & Decker (SWK) stock has remained low since the beginning of 2018. As of March 13, 2018, SWK had fallen 7.7% YTD (year-to-date). In comparison, industrial peers Danaher (DHR) and 3M (MMM) have risen 10.8% and 0.9%, respectively, while General Electric (GE) has fallen 17.3%.

Stanley Black & Decker’s stock price decline was primarily due to volatility in global stock markets. Although SWK reached an all-time high of $175.91 on January 15, 2018, profit booking has taken its toll, resulting in the stock’s mediocre performance so far in 2018. However, positive business developments could turn things positive. SWK has agreed to acquire Doncasters Nelson Fastener Systems for $440 million in an all-cash deal. The deal, expected to be completed by the end of 1Q18, could boost SWK’s acquisition revenue. SWK has guided for adjusted earnings per share of $8.30–$8.50 in fiscal 2018, suggesting an increase of 11%–14% year-over-year.

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Moving averages

SWK’s mediocre performance has resulted in the stock trading 5% below its 100-day moving average price of $164.60, indicating prevailing weakness. SWK’s 14-day relative strength index score of 45 indicates that the stock is neither overbought nor oversold. However, short interest data suggests that bearishness in the stock has reduced and that its price could move up due to short covering. Investors can indirectly hold SWK through the iShares US Consumer Goods ETF (IYK), which had a 1.1% exposure to Stanley Black & Decker as of March 13, 2018.

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