4-Star Stocks Poised to Pop: Snap-on

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Based on the aggregated intelligence of 140,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, small tool specialist Snap-on (NYSE: SNA) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Snap-on's business and see what CAPS investors are saying about the stock right now.

Snap-on facts

Headquarters (Founded)

Kenosha, Wis. (1920)

Market Cap

$2.25 billion

Industry

Machinery

Trailing-12-Month Revenue

$2.48 billion

Management

CEO Nicholas Pinchuk (since 2007)
CFO Martin Ellen (since 2002)

Return on Equity (Average, Past 3 Years)

15%

Cash / Debt

$709 million / $1.07 billion

Dividend Yield

3.2%

Competitors

Black & Decker (NYSE: BDK)
Danaher (NYSE: DHR)

CAPS Members Bullish on SNA Also Bullish on

General Electric (NYSE: GE)
Johnson & Johnson (NYSE: JNJ)

CAPS Members Bearish on SNA Also Bearish on

Capital One Financial (NYSE: COF)
Freddie Mac (NYSE: FRE)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 91.3% of the 196 members who have rated Snap-on believe the stock will outperform the S&P 500 going forward. These bulls include mitleg and tekennedy.

Earlier this year, mitleg tapped the stock as a handy tool for some solid income: "They pay a nice ... dividend. They have moderate debt, a low [PEG ratio], and generally good numbers."

In a pitch from last month, tekennedy expands on Snap-on as an emerging star. Here's an excerpt:

In the long term I believe emerging markets will catapult growth. The company has begun to move manufacturing to these areas helping establish a presence. As the average wealth grows within these countries the number of car sales (~70% of revenue is car related) should grow rapidly; due to the company's franchise model I believe the company is best positioned to grow within these areas. ... [S]hares have been beat down due to franchisee troubles and general automotive turmoil.

What do you think about Snap-on, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. The CAPS community is waiting to hear your opinions. CAPS is 100% free, so get started!

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Johnson & Johnson is a Motley Fool Income Investor pick. The Fool's disclosure policy always gets a perfect score.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 11, 2009, at 9:46 AM, TMFMarlowe wrote:

    I think the emerging-markets argument for SNA is dubious... SNA depends on professional prestige to maintain its tool prices, which are... nuts, really, when evaluated objectively. In the US, having Snap-On tools is a mark of professionalism, and young pro mechanics go deeply into hock (like, $30k+, financed by their local SNA dealer) to buy those big toolchests and shiny wrenches. But here's the thing, and it's the reason that SNA has never had much market penetration among weekend-mechanic types: A Craftsman wrench offers 98% of SNA's quality for something like a third of the price. There's lots of stuff out there that's almost as good (sometimes better) for a lot less money.

    Long story short, a lot of their success has to do with the status of their brand name, and I am deeply skeptical that they can replicate that in emerging markets.

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