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Should Tyco (TYC) Shares Be in Your Portfolio Now?

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On Oct 5, 2015, Zacks Investment Research upgraded security and protection services provider Tyco International Ltd.TYC to a Zacks Rank #3 (Hold) from a Zacks Rank #4 (Sell) primarily on the back of improving fundamentals. Tyco shares are currently trading at a forward P/E of 15.3x with long-term earnings growth expectation of 11.2%, which reflects its inherent growth potential

Why the Upgrade?

Tyco is building on the Internet of Things (IoT) capabilities with its proven expertise in Installation and Services groups and installation of more than one billion fire security and retail sensors and devices globally. These capabilities will enable Tyco to offer new intelligent services for customers ranging from Fortune 500 companies to small businesses. Tyco is currently focusing to expand the IoT platform so that it includes more sensors, devices and applications from external sources, thereby delivering a wide array of intelligent solutions for customers in multiple vertical markets.

We are bullish on the company's fortunes based on the relative stability of the global security and fire markets, as well as high and predictable cash generation, limited balance sheet risk and easy cost-out opportunities. There is a potential catalyst in the company's solid balance sheet and healthy liquidity position. The company returns significant cash to shareholders through share buybacks and dividends. Given the integration of Fire and Security businesses, the company is uniquely positioned to bring differentiated solutions to its combined customer base.

At the same time, Tyco has a pipeline of attractive acquisitions that complement its existing businesses. These potential acquisitions are in line with the company's strategy and provide solid long-term returns to its shareholders. Tyco has also been actively making efforts to reposition its portfolio to ensure the right mix of businesses of the company and maximize long-term value for its shareholders.

Other Stocks to Consider

Other stocks that look promising and are worth considering now in the industry include Lakeland Industries Inc. LAKE and Napco Security Technologies, Inc NSSC carrying a Zacks Rank #1 (Strong Buy) along with Net 1 Ueps Technologies Inc. UEPS carrying a Zacks Rank #2 (Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

TYCO INTL PLC (TYC): Free Stock Analysis Report

LAKELAND INDS (LAKE): Free Stock Analysis Report

NAPCO SECURITY (NSSC): Free Stock Analysis Report

NET 1 UEPS TECH (UEPS): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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