Danaher Corporation produces and sells electronic test tools, storage tank leak detection systems, motion, speed and position instruments and sensing devices, and general purpose and automotive specialty tools. For the 9 months ended 9/29/00, revenues rose 17% to $2.75B. Net income rose 26% to $236.4M. Revenues reflect acquisitions and strong sales volumes. Net income also reflects productivity improvements.

December 3, 2000

Despite the recent concerns with slowing sales in DHR’s tools and component businesses, the company announced on Friday that it feels confident in First Call consensus estimates of $0.59 a share for the fourth quarter. Citing continued strength in the process/environmental control segment, the company is also anticipated to grow earnings by 17% over the next 3 years. Ending the week with a run to new 52-week highs, DHR was given a lift from bullish comments from the company’s investor meeting with Lehman Brothers. As we noted in our previous write-up, we would need to close above the 52-week high of $65.81 in order to confirm a breakout. Since this did not occur, shares may still remain caught in consolidation near $65. With this in mind, we’ll anticipate for resistance to further challenge the stock at $65.81 (recent high) and further up at the new high of $67.31. The $70 mark should pose a more difficult challenge, so be prepared to take profits at this level. Advances through resistance on good volume of 430 thousand shares or more will reinforce momentum and will provide potential entry points. For support, we’ll look for previous resistance at $65 to hold as initial support. Further down, good consolidation at the $63 and $62 levels will help defend our stop of $60. Additionally, entry points will come when good mid-day volume of 215 thousand shares or better can confirm a hard bounce from either of these levels.

December 7, 2000

One important element of control and toolmaker Danaher's success has been its ability to combine growth and diversity. One such example of this is its Pacific Scientific division, which is expected to grow by 7% this year through its two major product lines, motion (motors) and safety equipment. As for the stock, shares have yet to extend their strong gains made last Friday, but a light volume pullback suggests they may be gearing up for another advance. However, the stocks current formation did not come without first testing our patience. Yesterday, the stock came just one-sixteenth from our stop but managed to stage a quick recovery late in the day. Today’s advance came as an extension of yesterday’s recovery and lifted shares to a close of $67.75. To extend these gains, we’ll look for good volume of 500,000 shares or better to accompany an advance above Friday’s all time high of $68.50. However, should DHR retrace prior to advancing, we’ll look for support to arise at yesterday’s close of $67.63. Additional support could come at $67, but be prepared for any drops through this level, as our stop resides just lower at $66. Reconfirm entries from support with a sharp reversal on good mid-day volume of 215,000 shares traded.

Picked on November 16th @ $63.50
Change since picked +4.25
Stop Loss @ $66.00

December 5, 2000

A broad based rally today helped send shares of Danaher running higher from an early gap up this morning. If this is what we can expect from a resolution to the presidency, then by all means lets get this over with! With a majority of stocks trading near their 52-week lows, DHR has just broken into new 52-week highs! This is great news for investors who bought in at our original entry price. What's more, today's advance came on good volume of 549 thousand shares and suggests that we may be on route to challenging further resistance at $70. Keep in mind that volume will likely need to remain at present levels in order for DHR to reach or exceed $70. With that said, we'll look for additional resistance at $75 to be trailed by a tougher challenge at $80. Although a run to each of these upper levels may be tough to obtain, strength in the broader market could certainly make the difference. On the flip side, we can now look for support to come at $67.31, bolstered by a recent high and today's opening price. Further support could come just lower at $67, which may now present the final base ahead of our adjusted stop of $66. Given the possibility of another retest of $65, we feel that a tighter stop will help lock in gains while still giving DHR an opportunity to advance higher.