Allegion (ALLE)

Allegion is a high quality business, with clear sustainable competitive advantages, operating in an attractive industry and is trading at a reasonable valuation due to worries around short term inflation headwinds.

• We like ALLE’s pricing power and high incremental margins driving 20%+ return on capital and strong free cash flow.

• We see upside to 20% EPS growth over 2021-23 driven by improving margins, increasing penetration of electronic locks and a cyclical bounce in non-residential spending.

Potential Upside: $181 (+33%)

Sensible Downside: $114 (-14%)

Link to Research