Conglomerate and Dow Jones Industrial Average stock United Technologies (NYSE:UTX) continues to benefit from its broadly diverse businesses. A tough air conditioning market was offset by strength in elevators and the aerospace aftermarket. The company reported that for the third quarter, revenues increased 17%, and earnings were up by 13%.

United Technologies is producing impressive results. Besides the fact that the company expects earnings to increase by up to 17% this year, its 28% return on equity (ROE) tops the 22% at General Electric (NYSE:GE).

United Technologies has been restructuring, but it is the firm's free cash flow (cash from operating activities minus capital expenditures) that is worth noting. While free cash flow declined from 2003's third quarter, it's still strong at $770 million.

That cash has allowed the company to spend $340 million on acquisitions this year -- and decrease total debt. It allows the company to pay a $1.40 dividend (1.6%) and buy back $688 million of its common stock this year, yet still add cash to the balance sheet. United Technologies is testament to what strong free cash flow can accomplish.

Still waiting in the wings for this year are the Linde Refrigeration acquisition and another $210 million in share repurchases.

This powerhouse of free cash flow sells for 14.5 times analyst estimates for 2005 earnings. For that, you get a stable of strong core businesses and a high technology future that includes fuel cells. Why buy a high-risk stock like proton exchange membrane (PEM) fuel cell company Ballard Power (NASDAQ:BLDP) -- and get no dividends while you wait -- when you can own the fuel cell company that supplies NASA?

The risk here is economic. As the economy goes, so goes United Technologies. But this is a company where free cash flow is creating an extremely strong set of core technologies with an equally strong balance sheet.

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Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.