Weekly Stock Pick

Scanning the stock charts after the last two weeks bloody nightmare with the liquidity crisis, I’m amazed the US Market hasn’t taken a big crash already. Maybe it’s, buy on the rumor and sell on the news environment setting up. Any which way, stay focused, and have a plan before you take new positions.

This week my stock scans have highlighted a diversified electronics industry giant as a buy candidate. In the long term, this buy position has a very good reward risk ratio to it. Short term, it could take a little more selling before it finds longer term support.

Buy Long Tyco International. Ticker TYC

Entry: Buy 36.84 to 35.29

Stop-Loss: 33.50

Take Profit Areas

39.68 to 41.10.

47.30 to 53.28

50.44 to 53.28

63.74 to 67.32

78.07 to 82.45

With General Electric, Honeywell, and United Technologies all being two to four times larger than TYCO, with GE being larger at 15 times capitalization, TYCO may have a growth advantage right now, and shares could rise on increased operating margins, stock buy backs, and capturing more global market share. Tyco Electronics has recently sold off its low profit margin businesses, did a $1 billion stock buy-back, and is concentrated on the profitable automotive and industrial markets in Asia, Europe and the United States, of which each amount for about one-third of their sales. Tyco’s automotive business is receiving a boost from increasing demand for automobiles outside the United States, most notably in China India, and the rest of Asia.

Some other analysts are looking for 50% price rise in TYCO in the next 18 months. Fitch Ratings is saying that Tyco Electronics may generate $500 million to $1 billion of annual free Cashflow this year. Tyco Electronics shares are currently trading at about 9 times’s anticipated 2009 profit of $2.91 per share. Also, Tyco is increasing its quarterly dividend to 33% or $0.20 per share with a 1.98% yield.

TYCO Company Profile

Tyco International Limited (Tyco) is a diversified, global company that provides products and services to customers. The segments are ADT Worldwide, Fire Protection Services, Flow Control, Safety Products, and Electrical and Metal Products. ADT Worldwide designs, sells, installs, services and monitors electronic security systems to residential, commercial, industrial and governmental customers. Fire Protection Services designs, sells, installs and services fire detection and fire suppression systems to commercial, industrial and governmental customers. Flow Control designs, manufactures, sells and services valves, pipes, fittings, valve automation and heat tracing products. Safety Products designs, manufactures and sells fire protection, security and life safety products. Electrical and Metal Products designs, manufactures and sells steel tubing and pipe products, as well as cable products. In March 2008, the Company sold its subsidiary, Nippon Dry-Chemical Co. Ltd.

Click here to review and Trial the Trading Software I used in determining my buy long position on TYC.