Snap-on

Snap-on is a relatively defensive investment with a strong brand in its core tools and diagnostics markets. The franchise model used in the tools division allows it to expand in a capital efficient manner and it generates significant free cash flow, part of which is used to fund a progressive dividend policy.

The company has paid a dividend every year since 1939 which has never been reduced. Snap-on also invests in technological advancement for its products to meet increasingly complex customer and regulatory demands.

It is also well-placed to benefit from an aging US vehicle fleet and can adapt its tool range to meet the needs of electric vehicles. With a significant manufacturing base in the US, Snap-on should prove resilient to trade and tariff concerns as evidenced by recent operating performance. 

Snap-On manufactures and markets tools, equipment, diagnostics and systems solutions to a range of markets including some more controversial sectors such as aerospace, defence and mining. These products also have non-military applications, are non-strategic in nature and represent only a minor part of the company’s overall activities. 

Environmental risks associated relate to the company’s use of energy and raw materials in its manufacturing processes. While Snap-on reports some environmental data, it does not disclose its Scope 3 carbon emissions, which are likely to represent a significant proportion of its overall footprint.

This lack of visibility poses risks related to regulatory alignment, transition planning and the company’s ability to demonstrate a credible long term climate strategy.