United Technologies Shares Preparing for Take-Off

Advertisement

In the current market environment, stocks that combine steady growth with a decent yield will be the best performers. And one stock is particularly attractive both for the strength of its current businesses and its growth potential for years to come is United Technologies Corporation (NYSE:UTX). Best of all, it has an above-market dividend yield of 2.4%, plus a steady revenue growth rate.

Known as “GE-lite” for its diverse business portfolio, UTX (through its various operating units, listed below) provides technology products and services to the building systems and aerospace industries worldwide.

* Otis, Carrier and UTC Fire & Security serve customers in the commercial and residential property industries.

* Carrier also serves commercial, industrial, transport refrigeration and food service equipment customers.

* Pratt & Whitney, Hamilton Sundstrand, and Sikorsky serve commercial and government customers in both the original equipment and aftermarket parts and services markets of the aerospace industry.

UTX, usually highly correlated to the overall market, has underperformed the S&P 500 by nearly six over the past six months. I expect this performance divergence to converge back to historic norms, with UTX being a relative outperformer over the next two quarters.

The recent announcement from Brazilian commercial plane-maker Embraer that it will upgrade its existing fleet should benefit UTX revenues, as that company is reportedly in talks with Pratt & Whitney. I’m looking for UTX to head toward its 200-day moving average of $82 by the end of next March.

Based on UTX’s current market price of $79.96 and using a target price of $82, a target date of March 30, 2012, and $1,000 of investment capital, this is an excellent candidate for making some short-term options gains.

To play this with options, visit TradingBlock.com, create a free Instant Login and try the TradeBuilder feature. Input the ticker, target price and date, and investment amount, and you’ll see several ways to trade that include selling a May call spread, buying a May put spread, or buying the stock. Best of all, you can see a potential profit-and-loss outline for each strategy.

Create your free login, and get access to these UTX option trading strategies by visiting the TradeBuilder here.

Tim spent 13 years as Chief Options Strategist at Man Securities in Chicago, four years as Lead Options Strategist at ThinkorSwim and three years as a Market Maker for First Options in Chicago. Tim makes weekly appearances on Bloomberg TV  “Options Insight”, Business First AM “Trader Talk”, TD Ameritade Network “Morning Trade Live” and CBOE-TV “Vol 411” to discuss everything from volatility and option related.


Article printed from InvestorPlace Media, https://investorplace.com/2011/11/united-technologies-utx-shares-preparing-for-take-off/.

©2024 InvestorPlace Media, LLC