Monday, June 13, 2011

Ingersoll-Rand PLC (NYSE: IR) Q3 2011 Price Target

Recent price: 44.09$
P/E Ratio: 17.58
3 Months Target Price: 50$

Company Description
According to Reuters, Ingersoll-Rand plc is a diversified company that provides products, services and solutions to enhance the comfort of air in homes and buildings, transport and protect food and perishables, and secure homes and commercial properties. IR-Ireland operates in four business segments: Climate Solutions, Residential Solutions, Industrial Technologies and Security Technologies. It generates revenue and cash primarily through the design, manufacture, sale and service of a diverse portfolio of industrial and commercial products that include American Standard, Club Car, Hussmann, Ingersoll-Rand, LCN, Schlage, Thermo King, Von Duprin and Trane. On December 30, 2010, IR-Ireland completed the divestiture of its gas microturbine generator business, which was sold under the Energy Systems brand. On October 4, 2010, it completed the divestiture of its European refrigerated display case business, which was sold under the KOXKA brand.

Confidence Margins
Strong resistance $52.33 (+19%)
Light resistance $50.05 (+14%)
Light support $43.87 (-0%)
Strong support $39.87 (-10%)

Shares of Ingersoll-Rand have been surrendered by shareholders in the month of May following a steep fall of the markets. This diversified industrial company is still very profitable and current prices offer an opportunity to cash in on the pessimism that seems to have been the norm over the last couple of days. Patient investors will be greatly rewarded.

Entry strategy
For the cautious investor:
Buy the stock for 45$ or less.

For the risk-taking trader:
The September 2011 45$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 220$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 50$, or keep it until 52$ if you are more bullish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches 50$. This should provide a very interesting return if the underlying reaches the target price as the contracts will get in the money.

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