Editor's Note: We're giving you special access to Bill's Private Briefing because spin-offs and deal making are minting new millionaires weekly. Companies are going out to buy growth, and they're bringing trillions of dollars off the sidelines as this niche explodes. Here's Bill…
We love spin-offs.
And it's not just because you were able to cash in on our recommendation of Abbott Laboratories Inc. (NYSE: ABT), whose subsequent breakup into two companies has so far resulted in gains of 27% and 47%.
We love spin-offs because, as a group, they offer high-probability opportunities for market-beating profits. Since the Abbott pick, we've issued reports on several other spin-off opportunities.
Our goal: To help you assemble a portfolio of these "special-situation" profit plays.
Here's the portfolio…
Given the number of spin-off plays that we've recommended already – and some others that we're "scouting out" for you – we're actually putting together one of our periodic "special reports" that come to you free as part of your ongoing subscription.
In the meantime, though, we've found another spin-off play that we didn't want to wait to recommend. And we're adding a new spin-off pick today – a play on the hot security sector that gained its freedom from its parent.
We typically make our recommendations before the separation transactions take place. But we like Allegion's makeup – and potential upside – so much that we decided to make this recommendation despite the spin-off having taken place.
The Dublin, Ireland-based Allegion describes itself as a company that "helps keep people safe where they live, work and visit."
The firm says that it specializes "in security around the doorway and beyond: Everything from residential and commercial locks, door closers and exit devices, steel doors and frames, to access-control and work-force productivity systems."
In other words, Allegion's offerings range from low-tech – steel doors and conventional locks – to high tech: automated-access and security systems, video monitoring, and systems integration. Its 23 business brands include:
- Interflex Datensysteme GmbH & Co. KG, which offers such workforce-management systems as time accounting and automated scheduling, as well as security systems that include ID and access-card production, closed-circuit (CCTV) video surveillance, and biometrics.
- CISA, a security pioneer that patented the first electrically controlled lock – back in 1926. It is also the first brand in the world to develop smart-card locks, which are used as electronic keys to safely and efficiently manage gates and entrances. CISA today develops and markets cylinders and locks for any kind of door, including electronic locks, panic bars, door closers, safes, and padlocks.
- aptiQ Smart Technology, which uses an "open-architecture" to design readers, credentials, and smartphone-based security applications. The aptiQ portfolio includes easy-to-use readers that can accommodate most magnetic-stripe cards. This product line also allows for the creation and use of proximity cards, aptiQ "smartcards," and the latest in so-called "near-field communications" (NFC) technology – the know-how behind our May 2012 recommendation of NXP Semiconductors NV (Nasdaq: NXPI), a stock that has more than doubled. (Coincidentally, NXP is a 2006 spinoff from Koninklijke Philips Electronics NV (NYSE ADR: PHG) – which underscores, again, the profit potential of "spin-off investing.")
- Bocom Systems, which specializes in video monitoring solutions for city and highway traffic, as well as for airports, government buildings, and general surveillance. That business unit designs, engineers, and installs both security alarm systems and more-complex closed-circuit-based security networks.
- And Schlage, a 90-year-old company that's one of the top names in lock technology. This business unit creates conventional key locks, as well as advanced electronic and biometric lock systems.
Real Growth Potential
Although cybersecurity gets the big headlines these days – and rightly so, thanks to stories about China stealing our weapons-system designs and retailers giving away our credit-card numbers – the heightened focus on security extends to the "physical" space, including our homes and where we work.
About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning. With his latest project, Private Briefing, Bill takes you "behind the scenes" of his established investment news website for a closer look at the action. Members get all the expert analysis and exclusive scoops he can't publish… and some of the most valuable picks that turn up in Bill's closed-door sessions with editors and experts.