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Adding to a Position on Weakness

The stock is rattled on an executive shakeup, but we still like the story.
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-- Buying 100 shares of ADT (ADT) .

After you have received this Alert, we'll add 100 shares to ADT (ADT) at $46.95.

The stock has been weak after the announcement that the company's CFO, Kathy Mikells, is leaving to go to Xerox (XRX) . ADT will likely go outside the company to replace her. Our sources say she is leaving because of better compensation and personal reasons. She will leave the company on good terms and will stay until May 1 to ensure a smooth transition.

We expect a strong upcoming quarter, guidance and cash flow (and further buybacks after the current plan has been completed). Mikells has been a strong CFO at ADT and was instrumental in the spin-out from Tyco. She focused on reducing leverage and building free cash flow, something that Xerox needs to do in its transition. Since the role of ADT's CFO position is now changing toward driving growth and further penetration for its Pulse product, it looks like the Xerox fit is a better one. We don't believe this signals any issues at the company, and we'll buy this weakness.

After our trade we'll own 1,775 shares of ADT, or 2.8% of the portfolio.

Regards,

Jim Cramer, Stephanie Link, and TheStreet Research Team

DISCLOSURE: At the time of publication, Action Alerts PLUSwas long ADT.