United Technologies Corp.
You might know United Technologies Corp. (UTC) as one of the stocks that helped push the Dow past 10,000 last week, along with the likes of Coke
I first picked up on the low-profile Dow component in October 2001, when Fool Bill Mann highlighted UTC in TMF Select (now Motley Fool Hidden Gems) at $54 per share. He described the company as something of a mini-General Electric
But I grew up loving airplanes, so I knew Pratt & Whitney. And the next time you step onto an elevator or escalator, look down -- and be shocked if it doesn't say Otis. Once I realized that these were names that I should know but just never associated with each other, UTC started to look enticing, and more than reasonable at 12 times earnings.
So I added some shares, looking to shore up my portfolio. All was good. But by this past spring, I had decided to run a more concentrated portfolio. In cutting my portfolio from 15 stocks to 10, I cut UTX loose. Unfortunately for me, it seems I should have kept United Technologies.
Last week, the company said it was on track to finish 2003 with earnings of $4.65 per share. Revenues in 2004 are expected to climb 10% to $33 billion, with its recent acquisition of Chubb -- a London-based security company -- to contribute $2.5 billion. UTC also pointed to an improving aerospace aftermarket. Meanwhile, the company expects both earnings and free cash flow to grow to between $5.00 and $5.30 per share.
Following the analyst meeting, United Technologies shares closed the week at $91.60 per share.
UTC does right by its shareholders, buying back shares and paying a decent dividend. More importantly, it is well positioned to benefit from an economic recovery. At about $92 per share, it trades at 18 times 2004 free cash flow -- and I believe it is worth every penny. That said, its share price is healthy enough to keep me from buying those shares back. For now, I'll simply lament United Technologies as the one that got away.