Revisiting Carlisle Companies: Time to Buy?

| About: Carlisle Companies (CSL)

I wrote about Carlisle (NYSE:CSL) on September 11, 2008 (click here for the article). Due to time constraint, I didn't write about the action I took shortly after that writeup which was selling Carlisle on September 25, 2008 at $33.02. After dividends, it was a gain of 10.34%, or 28.55% on an annualized basis (143 days of holding).

I'd like to visit this stock again after the market deteriorated. Carlisle is currently trading at just $20! That is a big discount from where I purchased the stock. Because I am an active investor/trader, it is easy for me to take my gain or cut my loss. For many of the readers, this may not be something that can be done easily thus I want to emphasize the importance of the price paid for an asset is something one must pay attention to.

Carlisle is currently trading 20% above the 52-week low of $16.60. According to my analysis, one of the strong characteristics of Carlisle as a company has been its ability to pay a dividend and raise it on an annual basis since 1988. This is an amazing statistic given we went through recessions in 1990, 2001, and 2008. Whether Carlisle can maintain that dividend is yet to be seen and frankly, only time can tell, but let's get into some numbers.

Carlisle is currently earning $0.91 and paying out $0.62 which equates to 68% payout ratio. This is rather concerning and it is the highest payout ratio according to my data set. Based on a stock price of $20, the dividend yield sits at 3.1%. My dividend discounted model tells me this is a great time to begin "stalking" this stock for possible accumulation as this can be a cyclical play.

Now that you know quick fundamentals of some price relation, let's try to see where you can buy this stock. Take a look at the chart below and you can see that it has been trading in range of $22 and $18. I am waiting for the stock to approach $18 before committing my hard earned money into it. With that, I would put a stop (selling if a loss occur) if the stock breaks below $16.60.

Another entry point would be a upside breakout play at any price above $22 (the resistance).

click to enlarge

My model indicates that the stock is a buy at $19 and a sell at $38.

I will be watching this stock closely.