Look for Textron (NYSE: TXT) to continue to benefit from the global economy's tailwind.Strong global economic growth should continue to generate solid demand of the company's Cessna jets and planes, which accounted for 51% of its profits. Further, analysts expect Textron's Bell division to perform well in 2008-2009 on strong commercial and military helicopter orders.
Textron's Industrial division should also post solid results, manufacturing everything from golf carts to lawn care machinery to auto parts. A decent, stable dividend adds to the mix. The Reuters F2007/F2008 EPS consensus estimates for TXT are $3.49/$4.09.
Further, TXT's P/E of 19 is not cheap, but it's a reasonable price, given the company's prospects for growth and modest amount of safety.
The risks? A sudden down-slide in aviation orders would hurt TXT's results, and if energy prices continue to rise, civilian aviation orders could slump. Otherwise, most analysts see the aerospace cycle lasting another two to three years, which is good news for Textron.
The First Call mean rating for TXT is: Buy [11 firms]. Mean 2008 target: $75.20 [high: $76, low: $74].
Stock Analysis: Textron is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than one year should be rewarded from TXT's shares. Sell / Stop Loss if you were to purchase shares in this company: $43.
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