Annotated article summary from this weekend's Barron's. Receive all our Barron's summaries by signing up here:
Finally, Airborne and Ready to Soar by Bill Alpert
Summary: Shares of airplane and helicopter maker Textron (NYSE:TXT) have doubled (to $89) in the past five years as corporations opt for private jets over the annoyances of commercial airline delays and security screening. Its commercial Bell helicopters are a favorite of oil riggers. The V-22 Osprey, a vertical-takeoff troop carrier, will finally be deployed in Iraq this year after decades in development; current government plans call for the purchase of 458 of these $70 million birds over the next 15 years. The helicopters, and its Cessna aircrafts, are largely responsible for its 2006 record $13.4 billion backlog. The Citation CJ4 jet, due for delivery in 2010, already has $1 billion in orders. International orders are on the rise (in 2007 they should account for 48% of all revenue), and sales are growing at almost 20% a year. Other units include golf carts, grounds-keeping machines, fuel tanks, power tools, pumps, and a financing unit. But CEO Lewis Campbell holds each unit manager accountable to either prove his unit's value as an income generator, or risk being spun off -- like its riveting business in 2006. With such a backlog, the company should be able to increase profits just by delivering those units -- by up to a dollar a year (EPS are currently around $6) -- which should likely see shares doubling yet again over the next five years.