Tyco Electronics Ltd. (TEL)

It is generally difficult for stocks to come back after they moved up big and then got crushed. It doesn't mean they won't ever go back up, but there is a trust issue that makes it difficult for many investors to get back in. Tyco is a good example and I'm not talking about the toy maker, I'm talking about the conglomerate that was moving up on General Electric a while back. First it was found this company lied on earnings statements, then their CEO went to jail for embezzling much of the shareholders money. I owned this stock before the fall. Cost me about $2000 that I will probably on see $500 back after the court settlement. After this happened, I wouldn't look at the stock after, some because I lost what I considered to be a lot of money and second because I lost what I considered to be a lot of money. I know that wasn't funny, but it is the reason we lose faith.





Since then, Tyco has been split up and now has... More It is generally difficult for stocks to come back after they moved up big and then got crushed. It doesn't mean they won't ever go back up, but there is a trust issue that makes it difficult for many investors to get back in. Tyco is a good example and I'm not talking about the toy maker, I'm talking about the conglomerate that was moving up on General Electric a while back. First it was found this company lied on earnings statements, then their CEO went to jail for embezzling much of the shareholders money. I owned this stock before the fall. Cost me about $2000 that I will probably on see $500 back after the court settlement. After this happened, I wouldn't look at the stock after, some because I lost what I considered to be a lot of money and second because I lost what I considered to be a lot of money. I know that wasn't funny, but it is the reason we lose faith.





Since then, Tyco has been split up and now has the ticker TEL. They spun off all of the other businesses because the sum of the parts was worth more than the whole. TEL beat analyst estimates for the quarter by six cents or just under 10%. Net sales increased 14%. Their guidance for next quarter beat current analyst estimates by just over 10%. Full year outlook went to $2.60 to $2.66. Analyst estimates were at $2.53. Their CEO saw large increases in orders from industrial and infrastructure, plus overseas automobile markets. They increased their share buyback substantially as they had authorized $750 million and that was raised to $1.25 billion.





Their chart also looks spectacular. They had a double top breakout on April 24th that has a trend going to $59 at the current trend. Their new guidance was huge, as they blew through their current 300 day moving average, and they also hit an all time high. When they IPO'd we saw a move of up to 39.82 and they moved past that and held on high volume of a 210% increase. Just look at their current earnings estimates for this year, and we see it places the end of 2008 at a PE of 15. That number would push growth for this year to 21% and if we carried that to their PE we would see a January price at $54.60 with a one year PEG ratio of one. All things taken into account this stock looks to be a value.





When looking at the segments of their business they do have some interesting growth platforms. Electronics are still their bread and butter and generate most of their operating income. They earned $419 million vs. $351 million. Network solutions saw a decrease in earnings by six million to $63 million. Undersea telecommunications saw the biggest move to $39 million from $4 million a year earlier and wireless systems also had very good growth from $5 million to $13 million. Most importantly is this stock has been very consistent with respect to growth, the only time in recent history they haven't done well is when they had to pay a major separation fee when they went for their IPO, other than that this has looked very good. Buy dips.