The problem with Newell Rubbermaid ( NWL) for several years had been execution. Things weren't so bad at the company that just any replacement for deposed CEO Joseph Galli would have been better. But Newell's board hit the jackpot with its Feb. 14 announcement that Mark Ketchum would take over as CEO.

Ketchum served in the role on an interim basis since October, when Galli was forced out. More importantly, perhaps, he has a solid pedigree. Before joining Newell's board of directors in December 2004, Ketchum spent 33 years at Procter & Gamble ( PG), serving as a division president for his last nine years.

For an example of the kind of upside potential a new CEO can deliver, just look at what happened to Hewlett-Packard ( HPQ) since Mark Hurd took over for embattled Carly Fiorina. That stock is up more than 50% in 10 short months.

I can't promise a repeat at Newell, but Ketchum used to work at the world's largest and most efficient consumer company. And while Newell shares have generated a 15.6% total return (including dividends) over the past year, the stock has been in a narrow trading range -- $21.54 to $24.97 -- since February 2004. Shares approached the high end of that range Tuesday, closing at $24.87 a share.

Is there enough inherent value in the company that the stock could finally break out of the mid-$20s? Yes, and enough so that investors should answer the following question in the affirmative: Should I do it?

Newell makes a wide range of consumer products, notably Rubbermaid plasticware. The company also has several toy brands, as well as Calphalon cookware, and it even sells Sharpie pens. Galli's strategy in the early part of this decade had been to cut costs and improve productivity from within.

The ideas were successful enough, though Newell was consistently hindered by rising input costs for products such as resin, which are closed tied to energy prices. Galli had "cut all of the fat," but the company still struggled to post any material top-line growth, and Newell posted annual earnings declines in eight of the last 10 quarters he was at the helm.

Ketchum, on the other hand, wants to reinvest back into the business.

To watch David Peltier's video take of this column, click here .

His plan includes taking some of those savings and increasing marketing spending to promote and build Newell's brands. The best part is that the market's expectations of Ketchum are not too lofty; the stock trades at just 15.7 expected full-year earnings of $1.58 a share. That's good news, because the stock has historically commanded a 17 times multiple, according to Bloomberg.

Signs of Value

Newell has maintained a 21-cent quarterly dividend since 2000, resulting in a 3.4% yield. Investors qualified for the company's upcoming March 9 payment back on Feb. 16, and I expect Ketchum and any new managers he may bring aboard will maintain the current payment. Newell is on track to cover the cash dividend 1.9 times with expected 2006 earnings of $1.58 a share. While this falls below my usual threshold of 2 times coverage to deem a payment secure, my confidence is affirmed by the fact the company's operating cash flow was a full 155% higher than reported net income.

In my work over at TheStreet.com's Dividend Stock Advisor, I've also noticed that a 3% dividend yield is the mark that really attracts investor attention. I believe the reasons are twofold. One, the yield is a full 100 basis points higher than what the average S&P 500 company offers. Two, so few well-known stocks pay dividends that high in the current environment.

I'm also intrigued by Securities and Exchange Commission filings that show that division president Hartley Blaha bought 11,000 shares on the open market on Feb. 14. Company insiders arguably know the operational strength of a business better than anyone, so it's a true vote of confidence when a manager puts $260,000 of his or her own money behind the stock.

Yes, readers should do it. The recent management change at Newell Rubbermaid has lit a new fire under the stock, and I believe the recent move is sustainable. Input costs appear to have peaked, and the shares are attractive to purchase at or below $25, as I believe Newell can trade up toward $30 by the end of the year.

David Peltier is a research associate at TheStreet.com In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Peltier appreciates your feedback; click here to send him an email.

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