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Shares of security and protection services provider Tyco International Ltd. (TYC - Analyst Report) scaled a 52-week high of $42.20 on Feb 14, before closing the trading session a notch lower at $41.93 for a healthy year-over-year return of 29.7%. Tyco’s share prices have steadily been on the uptrend from Sep 2013.

Despite its strong price appreciation, this Zacks Rank #3 (Hold) stock still has enough fundamental strength to drive it upward. The stock is currently trading at a forward P/E of 19.5x and has a long-term earnings growth expectation of 13.9%.

Growth Drivers

Tyco reported strong first quarter fiscal 2014 results as both revenues and earnings increased year over year. GAAP income from continuing operations was $270 million or 57 cents per share, a significant improvement from $159 million or 34 cents per share in the year-ago quarter. The year-over-year rise was driven by strong execution across all of its three segments, and accelerated growth in service and products through focused productivity initiatives.

Revenues for the quarter increased 2% year over year to $2,647 million. Organic revenues improved 1.5% in the quarter, primarily led by a 2% increase in products and a 2% improvement in service.

Tyco’s acquisition pipeline is attractive and complements its existing businesses. During the quarter, Tyco closed the acquisition of Westfire, Inc., a leading fire installation and services business in the mining and special hazard verticals in the U.S., Chile and Peru. The acquisition is expected to generate approximately $80 million in revenues in fiscal 2014 and provide Tyco a solid platform for Latin American growth.

Moving ahead, Tyco believes that its strong balance sheet will provide flexibility to continuously fund organic and inorganic growth initiatives and maximize return for its shareholders. Additionally, accretive acquisitions are expected to strengthen the company’s position by broadening its product and service offerings in the long term.

Estimate Revisions

Over the last 30 days, Tyco’s earnings estimates for fiscal 2014 climbed higher on expectations of a solid earnings momentum. We also envision an uptrend for the stock backed by its strong growth potential.

Other Stocks to Consider

Stocks in the industry that warrant a look include 3M Company (MMM - Analyst Report), Marubeni Corp. and Hutchison Whampoa Ltd (HUWHY), each of which carry a Zacks Rank #2 (Buy).

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