Stanley Black and Decker

Ticker: SWK Exchange NYSE

What does the company do? Toolmaker

2009 Financial report - Net sales: $3.7 billion. Net income: $224 million.

Q. Now that Stanley Black and Decker's merger has taken effect, will my shares keep going up, or should I be concerned?—P.M., via the Internet

A. While the world's largest toolmaker faces the challenge of continued weakness in construction activity and auto sales, it boasts two of its industry's top brand names.

The $4.5 billion Stanley Works acquisition of Black and Decker Corp. completed in March is expected to produce merger-related savings of $350 million a year through cost-cutting and greater pricing influence.

Over the past three decades, the two competitors had considered the possibility of merging from time to time as the tool business became increasingly commoditised.

Meshing two large companies is never easy or immediate, especially during an economic period when customers are cautious about restocking their inventory. It must work to justify the 22 percent premium paid for the shares of the acquired firm.

Shares of Stanley Black and Decker (SWK) are up five percent this year following last year's 55 percent increase. Earnings were down 34 percent in the second quarter on merger charges, though the company has seen signs of improvement and has raised its earnings projections.

The combined company gains a larger foothold in Latin America where economies have been holding up well. In recent years, it has also been reducing its ties to the less predictable consumer market where large retailers call the shots and has been increasing its more reliable industrial businesses. Stanley acquired European tool manufacturer Facom in 2006.

Consensus analyst recommendation on Stanley Black and Decker stock is "buy," according to Thomson Reuters, consisting of four "strong buys," four "buys" and two "holds."

Stanley Black and Decker offers a broad product line of carpenter, mechanic, pneumatic, power and hydraulic tools that's difficult to match. It also has a security segment that manufactures and installs electronic entry systems. This was expanded in 2007 through acquisition of HSM Electronic Protection Services.

Stanley Works CEO John Lundgren remains CEO at the combined company, with Black and Decker CEO Nolan Archibald to be executive chairman for three years. `Corporate headquarters remains in New Britain, Conn., with power tool offices in Black and Decker headquarters in Towson, Maryland.

Earnings are expected to increase 28 percent both this year and in 2011, according to Thomson Reuters. The firm has a strong balance sheet and can cover its interest payments with cash.

Q. Please settle this: How big should an emergency fund for a family be?—K.W., via the Internet

A. While opinions vary somewhat, many financial planners recommend that three to six months of your living expenses should be set aside for emergencies.

It should be just that—emergency money that you do not touch at all.

For starters, determine what you are spending: Figure your monthly mortgage or rent; homeowners insurance; real estate tax; utilities; car loan payment; credit card payments; and groceries.

"Add all of that up, multiply by three to six months and set the money aside in a safe place like a money-market fund," advised Angela Thomson, certified financial planner and president of Coastal Financial Planning Inc., Lincoln, R.I. "If your household income is high, you want closer to six months set aside since if someone loses a job it will take longer to replace."

With more modest household income, a three-month emergency fund should suffice, she added. Your debt load and other considerations will also play a role in determining the fund's size. Because an easy-access investment such as a money-market account can be tempting, you might put some of the money in a short-term certificate of deposit.

Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 N. Central Ave., Suite 302, Phoenix, Ariz. 85004-1248, or by e-mail at andrewinv@aol.com.