Best Dow Jones Stocks to Buy: United Technologies Corporation (UTX)
United Technologies Corporation (NYSE:UTX) is one of the oldest components of the Dow Jones Industrial Average.
The industrial conglomerate traces its inclusion back to 1939 when it was known as United Aircraft. Today, UTX operates with four divisions, Otis elevators, UTC Climate, Controls & Security, Pratt & Whitney and UTC Aerospace. With all four businesses now seeing growth, UTX is on the list of stocks to buy.
Last year, United Technologies saw its Climate, Controls & Security division as its largest revenue driver (29%), followed by Pratt & Whitney (26%), UTC Aero (25%) and Otis (20%). The good news for investors is the largest margins come from the UTC Climate division. This division has margins of around 25%, compared to the near 16% from UTC Aerospace and Otis, and the 10 to 11% range from Pratt & Whitney.
The first quarter saw strong sales growth for all four divisions. Overall sales increased 3% to $13.8 billion. The strong results helped UTX stay confident in its earlier guidance. Executives expect annual sales in a range of $57.5 to $59.0 billion and EPS between $6.30 and $6.60.
I have written several times about the bullish aerospace and defense sector happening now, including how a Trump presidency is helping defense stocks. UTX benefits from that cycle with its Pratt & Whitney and UTC Aero divisions. The real standout here to put this stock on the list is the Otis division.
Take a look the next time you are in an elevator, chances are it is an Otis. The company is one of the four largest elevator makers and after years of heated competition and domestic slowdowns is returning to growth through innovation and international markets. Strong demand for Otis is coming from India and airports, where the company has an impressive market share for automated walkways. Excluding China, orders for Otis were up 11% in the first quarter, representing strong growth in other markets.
UTX may be one of the oldest Dow Jones stocks, but it’s not done growing yet. The company’s four divisions all look strong in their current cycles. The company has set goals for 2020 and is currently using money towards share repurchases and potential acquisitions ($1 to $2 billion as a placeholder). UTX is among the best Dow Jones stocks to buy here.
As of this writing, Chris Katje did not hold a position in any of the aforementioned securities.