Illinois Tool Works: May Be Dull, But A Great Investment

| About: Illinois Tool (ITW)
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If you’re new to investing, don’t be afraid of companies that sound boring. It’s easy to get caught up in looking for the next Google (NASDAQ:GOOG) or Apple (NASDAQ:AAPL), but sometimes boring companies are great investments.

A perfect example is Illinois Tool Works (NYSE:ITW). Man, I love that name! In my book, the name alone is worth 15 on the p/e. I guarantee you, you’ll never hear someone say, “Keep your eyes on them, they could be the next Illinois Tool Works.”

Here’s some 411. ITW is a diversified manufacturer based in...well, Illinois. The company has delivered double-digit earnings growth for 10 straight years. Not many companies can say that. Plus, it looks to do it again this year. Yesterday, ITW reported Q3 EPS growth of 13% and it sees Q4 EPS coming in at 86 to 90 cents, which translates to growth of 11% to 16%. (Wow, even their financials are dull.)

What they do extremely well is buy dozens of small companies that they then fold into the larger ITW universe. The management team has done a remarkable job of pinpointing small businesses. High ROE, solid margins, strong cash flow. In the last 30 years, the shares are up nearly 100-fold, and that doesn’t include dividends that have steadily grown each year.