Reiterating: United Technologies - The jet age has just begun

Posted Jul 10th 2009 3:50PM by Joseph Lazzaro
Filed under: United Technologies (UTX), Stocks to Buy

I'm reiterating my Buy rating for United Technologies (NYSE: UTX), first recommended on February 13, 2009 at a price of $47.09.

True, the recession has caused air travel - leisure and business - to sag, but nothing in this era suggests the United States' two most prominent expressions of modernism - the skyscraper and airplane - are likely to be in less demand, as the U.S./global economic recoveries begin. The First Call FY2009/FY2010 EPS estimates for UTX are $4.09 to $4.44.

What's more, large backlogs for commercial aircraft for both Boeing (NYSE: BA) and Airbus bode well for UTX as we near FY2010. Meanwhile, elevator, heating/air conditioning system work will be hurt by the downturn in construction, but again, when emerging market GDP growth resumes, so will demand for UTX's services in these segments. Hence, UTX remains a Buy, unless you believe the rest-of-the-world (particularly emerging markets) can do without airplanes, elevators, and air conditioning.

Stock Analysis: United Technologies is a moderate-risk stock. UTX is an investment, not a trade. If you've already purchased UTX's shares, hold them. If not, consider buying a 25% position in UTX now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your UTX position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $33.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

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