Zacks Analyst Blog Highlights: Stanley Works, Black & Decker Corporation, Joy Global, Paccar and Illinois Tool Works

CHICAGO--(BUSINESS WIRE)--Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Stanley Works (NYSE: SWK), Black & Decker Corporation (NYSE: BDK), Joy Global (Nasdaq: JOYG), Paccar (Nasdaq: PCAR) and Illinois Tool Works (NYSE: ITW).

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Here are highlights from Tuesday’s Analyst Blog:

Stanley Works Acquires B&D

Stanley Works (NYSE: SWK) and Black & Decker Corporation (NYSE: BDK) have entered into a definitive merger agreement to create Stanley Black & Decker, an $8.4 billion global tool maker. The Board of Directors of both companies approved an all-stock transaction valued at approximately $4.5 billion.

Under the terms of the deal, Black & Decker shareholders will receive 1.275 Stanley shares for each Black & Decker share they own. The deal is expected to close in the first half of 2010. Upon the completion of the transaction, Stanley shareholders will own 50.5% of the combined company, while Black & Decker shareholders will own the remaining 49.5%.

The Shape of GDP

While Government spending is higher now as a share of total GDP than its long-term average, it is below what it averaged in the 1950’s and 1960’s, and is not way out of line. I would, however, note that the measure of government spending does not include transfer payments like Social Security, Medicare, or unemployment insurance. Those are considered part of Consumption.

On the other hand, Investment is the most volatile of the components of GDP, and even if it were to return to the previous record low of 12.77% of GDP, that would be a 15.7% increase, assuming everything else showed no growth at all. A return to the long-term average would be a 44.5% increase.

With commercial rents plunging and vacancy rates soaring, the value of commercial real estate is in free-fall. It thus seems unlikely that we will get any short-term recovery on investments in non-residential structures. Thus if we are going to get a rebound in non-residential fixed investment, it will most likely have to come from the equipment and software side. That would be a very powerful tonic for the likes of companies like Joy Global (Nasdaq: JOYG), Paccar (Nasdaq: PCAR) and Illinois Tool Works (NYSE: ITW).

However, will companies have a reason to invest in more equipment and software if the consumers are not buying? The key to that puzzle will most likely have to reside in the net exports area. At some point, we are going to have to get back to the point where were are running trade surpluses, where we export more than we import. Investments that reduce our oil import bill would also greatly help that effort.

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