United Technologies is one of those handful of stocks where you can buy 200 shares or 50 shares for your child's college fund, then look back on it in 10 or 15 years and be very glad you did.
Here are some of UTX's more impressive attributes: leadership position in high-value-added sectors, substantial defense contracts, infrastructure/capital improvement businesses, technological leadership, diversification & operational balance, economies of scale, massive amounts of engineering talent, long history of steady earnings growth and dividend growth. The Reuters F2007/F2008 EPS consensus estimates for UTX are $4.26-4.85.
For years analysts tried to agree on what constituted the essence of United Technologies -- the 'bread-and-butter division,' if you will -- and then it dawned on one reviewer that UTX doesn't have just one -- which is, of course, the essence of United Technologies' strength.
Consider these divisions, with its revenue contribution, and accompanying business ties:
- Pratt & Whitney (23%) - is a major supplier of jet engines for commercial, general aviation and military aircraft
- Carrier (28%) - is the world's largest maker of commercial and residential heating/air conditioning and ventilation systems
- Otis (22%) - is the world's largest maker of elevators and escalators
- Hamilton Standard (10%) - is a leading supplier of aerospace and industrial products
- Sikorsky (7%) - is one of the largest manufacturers of military and commercial helicopters.
First Call's mean rating for UTX is a Buy (19 firms). Mean 2007 target: $86.10 (high: $96, low: $81.00).
To sum up, the argument for UTX is strong, unless of course you envision a world and Asia economy without elevators, air conditioning, heating systems, commercial airlines, helicopters, etc.
Stock Analysis: United Technologies is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded with UTX's shares. Appropriate Sell / Stop Loss here would be $48.
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