Tim Biggam, TradingBlock (November 11, 2011, 1:40pm CDT)
|Symbol||Analyst Target Price||Target Date|
|UTX||82.00||March 30, 2012|
United Technologies Corporation (ticker: UTX), through its various operating units, provide technology products and services to the building systems and aerospace industries worldwide. Otis, Carrier, and UTC Fire and Security serve customers in the commercial and residential property industries. Carrier also serves commercial, industrial, transport refrigeration and food service equipment customers. Pratt and Whitney, Hamilton Sundstrand and Sikorsky serve commercial and government customers in both the original equipment and aftermarket parts and services markets of the aerospace industry.
Known as “GE-lite” for this diverse business portfolio, UTX has an above-market dividend yield of 2.4%, along with a steady revenue growth rate. In the current market environment, I feel stocks that combine steady growth with a decent yield will be the best performers.
UTX, usually highly correlated to the overall market, has under-performed the S&P 500 by nearly 6 over the past six months. I expect this performance divergence to converge back to historic norms, with UTX being a relative out-performer over the next 2 quarters. The recent announcement from Embraer that they will upgrade their existing fleet should benefit UTX revenues.
I look for UTX to head towards its 200-day moving average of 82 by the end of next March.
Play of the Day
Based on United Technologies Corporation's (ticker: UTX) current market price of $79.96 and using a target price of $82.00, a target date of March 30, 2012 and $1,000 of investment capital, below are three options strategies (ranked by potential profit) and a comparative stock trade to consider should the price target be achieved at the target date.
Click on the strategy name below to access trade details using TradeBuilder on TradingBlock.com. Powered by TradingBlock's TradeBuilder.
|Strategy (click for details)||% Return at Target||Probability of breaking
even or better
|Buy May Call Butterfly||+72%||43%|
|Sell May Iron Condor||+40%||52%|
|Buy May Call Spread||+18%||58%|
* Click link to access TradeBuilder details on TradingBlock.com. Must have Instant or Actual account. Subject to change due to changing market conditions. Click here to view risks regarding selling stock short.
DISCLAIMER: This content is provided for educational and informational purposes only. Evaluate any strategy prior to use to understand risk and suitability. TradingBlock does not endorse or warrant any Market Analyst content, service or product. Use this content at your own risk without guarantee or warranty of any kind from TradingBlock. Tim Biggam is a TradingBlock registered representative. He is not compensated by TradingBlock for any market research or analysis services.