United Technologies

UTX-N

They agreed to a merger with UTX-N and will form a really interesting industrial as they spin off OTIS, their carrier division, and have in the past spun off Goodrich. IIS with Raytheon is growing very, very rapidly. It is a very interesting opportunity.

(A Top Pick Aug 08/18, Down 1%) UTX-N is a diversified company in the aerospace, HVAC and elevator space. They will spin off some of these holdings and plan to merge with RTN-N. This may have caused some confusion in the investors mind. She thinks the some of the parts is worth more the share price today. She likes the reoccuring revenues that goes with the service contracts.

They are spinning off OTIS and Carrier. Their aircraft engine business will have a new engine next year for A320s and F35s. The share price has been held back somewhat. She likes their business model. (Analysts’ price target is $152.41)

The industrials are overpriced. He was excited about the Raytheon deal, but the market doesn't like it. $106.46 is his model price. There's better value elsewhere. Around $105 is interesting. Too expensive now.

Right now UTX-N is a nice buying opportunity. They will spinoff some assets and will be involved with RTN-N in a merger, which will create some great opportunities. They sell original equipment with service contracts attached to generate good margins for 10 years or more. This makes them more defensive.