To repair stucco, you may need - depending on the extent of the damage - stucco caulk, which comes in cartridges that fit caulking guns, safety goggles, work gloves, a cold chisel, sledge-hammer, masonry cement, sand, and paint.
DEAL WITH SMALL CRACKS AS SOON AS THEY APPEAR.
Clean any debris within the crack, and using a caulking gun and stucco caulk, run a small bead down the crack. Work to make sure that the new stucco finish matches the old.
To ensure that you have a solid finish, let the stucco dry slowly, misting it occasionally, over at least two days.
Paint the patch to match the existing finish. Take a sample chip with you when you purchase paint. As the finish has probably faded over time, the original color may no longer match.
REPAIRING LARGE DAMAGED AREAS OF STUCCO
To make a solid repair, especially if the stucco is crumbling, you will need to use a cold chisel and mallet to chip away the damaged stucco until you have an area of firm borders.
If any lath or building felt is damaged, you will need to snip away the damaged lath, and remove the area's felt. Staple down new felt, and affix new lath.
Mist over the area and apply a base coat of - two parts masonry cement to seven parts of sand. To this, mix in water just until the material holds its shape. Keep this base coat about one quart inch from the surrounding material. Score the surface so the next coat will adhere better. Misting it occasionally, let this dry for two days. Apply a second coat to be flush with the surrounding material. Allow it to dry similarly.
To level each layer, use a long board, and drag it down the surface.
When the second coat is dry, apply a finishing layer to match the texture of the structure. The finishing layer should be made of five parts of masonry cement and seven parts of clean sand. Mix in water until you have the consistency of creamed butter.
When the surface is well cured, paint to match.