Stanley Black & Decker, Inc. (SWK): A Bull Case Theory

We came across a bullish thesis on Stanley Black & Decker, Inc. on Deep Value Capital’s Substack. In this article, we will summarize the bulls’ thesis on SWK. Stanley Black & Decker, Inc.'s share was trading at $69.80 as of July 15^th. SWK’s trailing and forward P/E were 29.58 and 15.82 respectively according to Yahoo Finance.

Stanley Black & Decker (SWK), widely known for its power tools and iconic brands like DEWALT, CRAFTSMAN, and BLACK+DECKER, is undergoing a quiet but compelling transformation. The company has already executed $1.7 billion of a $2 billion cost-reduction plan, with gross margins rebounding to 31.2%—up 1,200bps from the trough—while operating leverage improves and inventories fall.

Though 87% of revenue comes from its Tools & Outdoor division, its smaller Engineered Fastening segment serves critical applications in aerospace, auto, and industrial manufacturing. Despite its market leadership and ties to reshoring, infrastructure, and automation, the stock remains down over 65% from its 2021 highs and trades at less than 7× peak free cash flow.

Management forecasts mid-single-digit organic growth, more than double industry norms, supported by housing recovery, falling interest rates, and potential policy tailwinds. Risks include prolonged weakness in housing, unresolved tariff headwinds of ~$100M annually, leadership transition friction with a new CEO starting in October, and the broader risk of a recession derailing tool demand.

However, the turnaround strategy is showing real progress: core brands are gaining share, margins are expanding, and the balance sheet is cleaner. By 2028, with normalized 11% FCF margins on ~$17.6B revenue, the company could generate ~$1.94B in FCF. Applying a modest 18× multiple suggests a $34.9B valuation, over 3× today’s $11.4B market cap—implying 205% upside, or a 37% CAGR. Without assuming a cyclical boom, Stanley Black & Decker represents a fundamentally de-risked, attractively priced turnaround story tied closely to America’s rebuilding cycle.

Previously we covered a standout bullish thesis on IHS Holding Limited by the same author in May 2025, which highlighted its CPI-linked tower model and strong FCF potential across emerging markets. The company’s stock price has appreciated approximately by 7.5% since our coverage. The author uses an identical approach in the Stanley Black & Decker thesis, emphasizing its margin recovery and cost discipline.

Stanley Black & Decker, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held SWK at the end of the first quarter which was 34 in the previous quarter. While we acknowledge the potential of SWK as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.