The last time we talked about Snap-On Incorporated (NYSE:SNA) back in August I wasn’t a buyer, but I also didn’t recommend selling and staying away for good. Instead, I wanted to see how things shook out, and I’ve been very pleased to see how the action has changed.

For those of you who are unfamiliar with the company, Snap-on is probably best known as a leading global manufacturer of tools, but it also makes equipment, diagnostics, repair information and systems solutions for professionals in a wide variety of industries.

The company was founded in 1920 and has since grown to a market-cap of $3.4 billion.

After having met with and interviewed SNA’s management, it’s clear that the company has a long-term approach in areas like vocation training that isn’t yet reflected in the share price but does make a difference longer term for both the company and society.

That said, there are some near-term issues, including execution.

Earnings Provide Much-Needed Fuel

Snap-on just reported its third-quarter earnings last week, and the company continued its impressive streak of beating on the top and bottom lines.

Earnings of $2.45 a share were up 10.4% year-over-year and ahead of the consensus at $2.42, and sales gained 8.4% to $903.8 million, also better than expectations of $890 million. I was disappointed that the Tool Group’s sales were once again lower, but on the other hand the Repair Systems & Information Group saw its sales increase 16.6% — or 8% organically. This area of the business is set to grow for a long time as management makes an even greater push into independent garages.

The quarterly numbers helped push SNA out of its long-term down channel, and while it may drift a bit and test the old resistance level as support I fully expect to see higher prices down the road.

Barron’s recently upgraded SNA to “outperform” from “market perform,” and upped its price target to $180-$190. I couldn’t agree more. I think there is a clear shot to $175 from current prices, and in the next 12 months we could be looking at a $200 stock.

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