United Technologies Corporation (NYSE: UTX) may actually be the best stock in 2012 out of the three conglomerates which are in the Dow Jones Industrial Average. While we have had a long-standing positive bias for General Electric Co. (NYSE: GE) and been only a bit warm on 3M Co. (NYSE: MM), the analyst community currently has the highest marks for United Tech, followed by GE and 3M. Some of this is simply due to GE’s price gains over the last few weeks and United Tech made our list of most undervalued DJIA stocks.
Analysts according to Thomson Reuters have a consensus price target objective of $88.79 over the next year versus a current share price of $74.90. That gives an implied upside of about 18.5% and its 2.6% dividend yield is likely to be raised sometime around this coming summer if all goes well.
One key issue is that much is price-based because United Tech is also down from its 52-week high the most of the three DJIA conglomerates with a drop of more than 18% from its 52-week high. The market cap of $68 billion keeps United from being in the mega-cap or super-cap group and not that much higher than the $58 billion worth of 3M and only one-third of GE’s market cap.
There is a wild card here, a very big wild card… The Goodrich Corporation (NYSE: GR) acquisition which has been a huge overhang. That is the trick, and a clean deal will allow it to soar but a troubled deal could act as as a continued thorn in its side.
With a 52-week trading range of $66.87 to $91.83, United Tech does not even to reach a 52-week high to reach the consensus analyst price target.
JON C. OGG