Stockchase Opinions

Christopher Blumas United Technologies UTX-N PAST TOP PICK Sep 17, 2019

(A Top Pick Jul 25/19, Up 1%) UTX will merge with Raytheon then spin off its HVAC and elevator businesses. They will create value with that merger, which will unlock value of 30-40% over the next two years.
$137.210

Stock price when the opinion was issued

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COMMENT

UTX merging with Raytheon He owns Raytheon and this deal with UTX is a great combination. Before the merger, UTX will spinoff its elevator division--a taxable event for Canadian. For Canadians to lower this tax hit, buy Raytheon. Recommended. UTX may struggle a bit because of Boeing's 737 Max woes (UTX makes engines), but long-term aerospace looks healthy. There are 26,000 commercial planes now, but by 2030 there need to 35,000, outpacing GDP growth. Combined synergies will make this company powerful.

HOLD

Over a 2-5 year time horizon, this will do fine, especially following the acquisition of Raytheon. This will diversify their business into the defense space. With low interest rates and good economic growth, this will be a good long term hold in the industrial space.

TOP PICK
Likes all its different components. Stock price doesn't reflect sum of all the parts. Less cyclicality than other industrial stocks. Increases dividend. Yield is 1.92%. (Analysts’ price target is $171.11)
BUY

All developments with UTX (meaning the Raytheon deal) are positive. The stock has come off recently and is holding around $150. If it stays there, you can enter UTX.

BUY

They're merging with Raytheon, which he bought a while ago as the best way to get into UTX. It's a commercial as well as defense stock. UTX will spin-off businesses like Otis Elevators. This will only grow the stock.

WATCH
Going to split into 2 or 3 companies. Usually split ups are good generators of value. He's cautious, however. Commercial aerospace is in a downturn right now, due to coronavirus and 737 MAX issues. Hold off.
COMMENT
Spinning out elevator business, which was a cash cow. Stock ran up on the split. There may be a trade. The elevator space is where you want to be. (Analysts’ price target is $170.00)
PAST TOP PICK

(A Top Pick Jul 25/19, Down 21%) Raytheon (RTX) bought them out. Its valuation is 15 times earnings. It is diversified, so is not a pure aviation play. They have a defense segment a good balance sheet. He would be adding to this. When they spun out OTIS and Carrier, they actually added to their position on the elevator segment (OTIS) and sold Carrier.

PAST TOP PICK

(A Top Pick Jul 10/19, Down 17%) Merged with Raytheon. Now the company is half defence, and half commercial aerospace. It will be a tough year for the aerospace side. Sound balance sheet. Willing to ride it out. Very strong management. Travel will resume eventually.

PAST TOP PICK

(A Top Pick Feb 13/20, Down 16%) They spun off Otis and Carrier, and merged with Raytheon. It is now half defence and half aerospace. The defence side has been doing well. Continues to hold it, and is a play for the recovery in the airline industry. Great management team. Earnings are depressed, but it will pick up with reopening.