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Friday,
October 17, 2008
(Cont'd from
above)...
At five of UTX's six
businesses, margins
were
higher-than-expected...
Again, you've got to
understand how good
this is... partially
in part because of a
new program that's
expected to bring in
about $500 million
in cost savings over
the next two years.
The helicopter
business was the
biggest grower, at
11%... Carrier...
you probably know
that as UTX's
heating, ventilation
and air conditioning
business... was
flat. That's pretty
impressive, when you
consider the fact
that Carrier is
levered to new
housing... and we
know how bad that
is.
UTX is another great
example of a company
that used to have a
meager dividend but,
courtesy of the
market's vicious
declines, is now a
dividend play, with
a 3% yield.
The company has
raised its dividend
every year for the
past 15 years, and
put through another
20% increase on
October 8th. I
regard that as a
fabulous sign of
confidence in the
future.
If they do the same
thing next year, and
the stock stays at
its current price,
you're going to get
a 3.5% yield.
I think you should
buy this one, the
same way I've
recommended buying
other newly
high-yielding
stocks... on a
scale, not based on
price, but on
yield... as it goes
lower.
Make no mistake...
even after this
better-than-expected
quarter, I think UTX
could still be
pushed down by hedge
funds gone wild, and
redemptions...
So, if you wanted to
buy 200 shares, you
could put on 50 of
them at this price.
The wait for UTX to
fall to $44... I
hope it doesn't get
there but, if it
yields 3.5%, we're
buying the next
50...
And then, see if it
goes still lower...
to $38.50, where it
would yield 4.0%.
You should be so
lucky...
In addition to the
quarter and the
dividend, this one
can work because it
withdrew its offer
for Diebold, which
had been putting
pressure on the
stock and will
instead use some of
the money to
increase its 2008
buyback from $2.5
billion to $3
billion.
The darn stock, even
after all this,
sells at only 10x
earnings...
It is cheap on the
metrics, despite our
concern about all
economically-sensitive
companies... and its
stock was down $2
bucks today, despite
that fabulous
quarter it just
reported.
I want to know how
this great quarter
was even possible,
and what the future
looks like for
UTX...
That's why we're
bringing on one of
my absolute favorite
execs in America...
George David,
United Technologies
(UTX)'s
chairman and former
CEO, from April of
1994 to April of
2008.
Now, get this...
just so you know...
why do I like
someone? Why is
someone a hero to
me?... Under his
tenure, UTX returned
996%... 9-9-6...
including
dividends... blowing
the S&P 500 out of
the water, as it
returned just 277%
over the same
period.
Mr. David, welcome
back to Mad
Money!...
Jim's comments
AFTER the interview:
Look, I've got to
tell you... If this
is what a recession
looks like... 10x
earnings with a
great balance
sheet... I'm in!
Thank you very, very
much to George
David, chairman of
United Technologies
(UTX).
Read Jim's next Segment
here
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