Wall Street Strategies

Snap-On: The Future Looks Promising

Awesome insights everyone. It's on the ground assessments like these that are very critical in proper analysis. I am still upbeat on SNA, but am certainly open to healthy debate.

Snap-On: The Future Looks Promising

Thanks for the color, the feedback is much appreciated. I think the opportunities for Snap-On lays in China and in the aftermarket. Dealer service bays are going away (see GM announcement), meaning business is going to have to be picked up somewhere. Perhaps technicians open their own garages. It's all high level thinking I suppose. In the meantime, I am pulling for the special dividend! :)


On Apr 29 01:50 PM bcncv wrote:

> Snap-On makes some great tools, and I still own some that my grandfather
> bought many years ago. They're the best tools in the family, and
> they really do last forever.
>
> I'm not sure I'd own it as an investment though. Although I haven't
> studied the stock as closely as you, I feel like they're fighting
> a trend of car manufactures creating lower maintenance cars, and
> younger generations that are less interested in maintaining their
> own vehicles. I don't know anything about their international sales,
> but I don't imagine the super high quality / super high price combo
> will sell well in many growing emerging markets either.
>
> Although if they declared a special dividend of a new ratchet set,
> I'd buy stock in a heartbeat :-)

Snap-On: The Future Looks Promising

I like those insights, do you work in the automotive repair industry? The one thing I wonder is if dealers subsidize the tools for their technicians, in some cases I would have to assume they do. My thinking here, as it pertains to the Snap-On opportunity, is that technicians would have to invest in more capital intensive goods (like the diagnostics, etc) rather than regular hand tools. I would certainly welcome any added insight.

-Brian


On Apr 29 12:16 PM Birdsnest wrote:

> Not sure that I agree with your thesis regarding growth in tool sales
> as auto dealers close and technicians move to aftermarket repair
> shops. Auto mechanics typically own their own tools and take them
> with them to their new job. This is simply a locational transfer
> of existing tool stocks and not really an opportunity for incremental
> sales. Indeed, total automotive tool use is probably more function
> of total aggregate miles driven (down) adjusted for long term shifts
> in auto quality (better), adjusted for DIY leakage (up sharpley,
> driving down aftermarket repairs and maintenance). These combined
> factors would seem to me rather negative for Snap-on.

Snap-On: The Future Looks Promising

I love your line of thinking Rob, and appreciate the insight. One great thing to keep in mind too is the relatively high barriers to entry to tool manufacturing, especially for the products being put out by Snap-On. I have always seen a level of innovation from them that has gone unrivaled by others.

-Brian


On Apr 29 11:59 AM TraderRob wrote:

> We may see a pop in sales for "best in breed" brands in many sectors
> of retail. Snap-On has been producing professional grade wrenches
> dating back to the 1920's and have since integrated the brand into
> a wide spectrum of shop tools and equipment. Tax rebates and cuts
> from the stimulus will allow some middle income earners a one-time
> pop in disposable income that should benefit brands like Snap-On.
> Dire economic times inspire many to plunge into DIY projects instead
> of taking the car to the shop, causing the return on investment of
> "Lifetime Warranty" products like Snap-On to become more attractive.