Tyco International Ltd. (NYSE:TYC)
A diversified manufacturing and service company that, through its subsidiaries, designs, manufactures, installs, monitors and services electronic security and fire protection systems and provides consulting, engineering and construction management.
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the company is spinning off several subs.
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Real solid valuation measures. Good growth potential. Buffett is a believer.
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After watching this for about a year, stuck in the $25-28 range, it has recently clawed its way back over $30 and stabilized here. My bet is that its getting ready to turtle its way up to the mid-$30s. Conglomerate value greater than the sum of its parts, under good management that's extremely motivated to be a saint for shareholders after its notorious fiasco that still shadows the company to this day, which I view as an extremely good thing. (Disc: I don't own TYC, but with extra funds, I would seriously consider owning this value pick as a longer-term hold.)
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New management, looks like ge in younger years.
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Strong comback , new team focused
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Tyco has excellent electronics, healthcare, and engineered products divisions
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tyco had bad mgt but is inherently a good stock. it manufactures necessary items like steel pipe .rubber gloves and other things we can't do without.
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soft because of bad news... good products win in the end.
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going down
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Great product plenty of franchise potential
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Breakup into severl companies, bullish overall
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Once they get over the scandal and people start to forget, people will think more about what the company does now than did then.
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believe they are in mid turnaround, capable of earning more, buying back stock and breakup will all help stock price
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sorting out the mess.
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Tyco trades at <10x normalized FY2005 EBIT and there is much room for margin improvement from cost-cutting and growth (operating leverage). Market is undervaluing TYC based on recent underperformance, conglomerate discount and undercertainty of 1Q07 spin-offs of electronics and healthcare businesses. Sum of the parts valuation suggests TYC worth $37-$40. Electronics seems valued at $22.3BB (11.5x EV/EBIT). Healthcare appears valued at $33.5BB (14x EBIT). Engineered products carries a fair value of $7.4B (10.8x EV/EBIT). Fire & Security has a fair value of ~ $28.3BB (12.8x EV/EBIT). After removing ~$5.5BB in value for Corp Exp (assuming 12x '05), TYC carries an EV of ~$86bb. This implies equity value of ~$75.5bb (after $8.5BB in net debt) or about $37.50 per share. There are 3 catalysts to achieve target: 1) 1Q spin-off; 2) investor activism; and 3)Fire & Security div traction.
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