The former Stanley Works showed an aggressive streak in 2009 when it spent $4.5 billion for Black & Decker Corp., dramatically expanding its toolmaking business. Last week the new Stanley Black & Decker Inc. (NYSE:SWK) hinted at where it might look for its next big deal, rekindling talk that it could buy an expanded presence in the security market.

New Britain, Conn.-based Stanley on March 3 held its first investor day since the B&D deal, and, according to investors and analysts at the event, management suggested that the company could be interested in moving into residential security monitoring. Stanley already has a security unit that could generate $4 billion in sales by 2015, but the business is focused primarily on monitoring commercial properties and on healthcare applications.

Residential security is a fragmented business that has seen a good bit of consolidation in recent years, most notably Tyco International Ltd.'s (NYSE:TYC) $2 billion deal in 2010 to merge its ADT unit with Brink's Home Security Holdings Inc. Another company, Protection One Inc., sold itself to GTCR Golder Rauner LLC last year for $828 million after a four-month auction.

Protection One would have been an obvious target for Stanley, and in fact many in the industry speculated that only the B&D integration kept Stanley from participating in that auction. Stanley, which told analysts it did not expect to do any major deals before the end of this year, could eventually get another chance to buy Protection One. GTCR has previously grown and sold two security-focused portfolio companies, including one to Stanley.

An expansion deeper into the residential sector would carry significant risk. Raymond James & Associates Inc. analysts Sam Darkatsh and Budd Bugatch in a note said a move "would require an acquisition of size and be an area where current leadership has little managerial experience, in an industry historically plagued by large numbers of small and highly price-sensitive customers that requires scale to earn attractive returns." Then again Stanley has shown an appetite for risk, buying B&D and doubling down on the tool business in the throes of the housing slump. So far that deal seems to have paid off, with Stanley shares hitting a five-year high earlier in the week.