Industrial manufacturer Ingersoll-Rand (IR) owns a diverse collection of brands that includes Club Car golf carts, Trane air conditioners, and its namesake line of industrial equipment. Until last quarter, IR also owned a big security business that were spun off as Allegion (ALLE), a separate $4.4 billion firm. While the deal removes Ingersoll-Rand's highest-margin business, it should give the firm considerable wherewithal on its balance sheet in 2014.
Ingersoll-Rand owns market leading positioning in most of its businesses. After the security unit spinoff, IR's exposure to HVAC equipment has increased considerably, growing to 60% of revenues. With commercial and residential construction enjoying new life this year, IR should benefit in a big way as demand stays at the high-end of its recent range.
While Ingersoll-Rand's business is certainly cyclical, the firm has been battling its cost structure to keep margins high. That'll be particularly important now that the high-margin security business is off the books.
With rising analyst sentiment in shares of this Rocket Stock in January, we're betting on shares.