We’ve looked at five conglomerates that offer some upside: General Electric Co. (NYSE: GE), 3M Co. (NYSE: MMM), United Technologies Corp. (NYSE: UTX), Honeywell International Inc. (NYSE: HON), and Tyco International Ltd. (NYSE: TYC).

With one exception, implied upside for these companies wanders in the mid- to high-teens. The exception is United Technologies. The second-lowest of the five is Tyco, the de-conglomerated conglomerate.

General Electric Co. (NYSE: GE) traded at $19.06 and has a market value of $203 billion. The consensus target price from Thomson Reuters is $22.57 and the 52-week range is $14.02 to $21.00. GE has a dividend yield of 3.6%. The implied upside to the consensus target is 18%, but we would note that the target is above the 52-week high.

3M Co. (NYSE: MMM) traded at $83.38 and has a market value of around $58 billion. The consensus target price from Thomson Reuters is $95.47 and the 52-week range is $68.63 to $98.19. 3M has a dividend yield of 2.8%. The implied upside to the consensus target is 14.5%, but we would note that the target is also above the 52-week high.

United Technologies Corp. (NYSE: UTX) traded at $73.37 and has a market value of around $67 billion. The consensus target price from Thomson Reuters is $94.60 and the 52-week range is $66.87 to $91.83. UTX has a dividend yield of 2.6%. The implied upside to the consensus target is 29%, but we would note that the target is also above the 52-week high.

Honeywell International Inc. (NYSE: HON) traded at $56.72 and has a market value of around $44 billion. The consensus target price from Thomson Reuters is $67.56 and the 52-week range is $41.22 to $62.00. Honeywell has a dividend yield of 2.6%. The implied upside to the consensus target is 19%, but we would note that the target is also above the 52-week high.

Tyco International Ltd. (NYSE: TYC) traded at $53.59 and has a market value of around $24 billion. The consensus target price from Thomson Reuters is $62.20 and the 52-week range is $37.39 to $57.75. Tyco has a dividend yield of 1.9%. The implied upside to the consensus target is 16%, but we would note that the target is also above the 52-week high.

Based on these numbers, United Technologies offers the most potential upside, but the thing to keep in mind that its acquisition of Goodrich Corp. (NYSE: GR), which is set to close by mid-year, will leave the company with a large debt and not the brightest prospects for profit growth for another year or so.

Tyco, with the lowest implied gain at 16%, is splitting itself into three pieces. The company expects to complete the spin-off of its home security division into The ADT Corp. later this year as well as the spin-off of the fire and security division and the spin-off and merger of the flow control business with Pentair Inc. (NYSE: PNR). All these moves pushed the stock to a year-to-date gain of 20% in late March, which has since been ratcheted back to 15%. And over the past 12 months, only Tyco has shown an increase in share value, up more than 11%.

GE, with its 3.6% dividend yield, and implied upside of 18% is a safe choice here. 3M, with the lowest upside potential, and Honeywell are about equal otherwise. United Technologies has the most potential upside, but it may take a while to materialize. Overall, Tyco, which has withstood the fall in prices better than any of the others, may offer the best reward sooner than any of the others.

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The kinds of crimes these executives commit generally fall into one of two categories. In the first case, CEOs mean to profit directly from their actions, including offenses such as insider trading and embezzlement. Examples of this include Tyco’s CEO Dennis Kozlowski and Adelphia’s CEO Jonathan Rigas, who each stole millions of dollars from their companies.

In most other cases of executive white-collar crime, however, CEOs are not stealing directly from their companies. Instead, they are trying to ensure the safety of their jobs by promoting the appearance of success of their companies through fraud, false accounting and bribery, among others. In seven of the 10 cases, executives inflated company profits or failed to represent gains or liabilities. In nearly every case, the CEO was in league with other executives, many of whom also charged and convicted.

The irony is that while these corporate leaders were trying to make their companies look better, they usually succeeded only in putting them through a period of severe financial hardship, as was the case with Rite Aid. In several cases, such as Adelphia and Enron, the financial revelations were so severe, causing total bankruptcy. In a few cases, Tyco for example, the company continued to perform well, despite the crimes.

24/7 Wall St. examined the CEOs who have been arrested while heading Fortune 500 corporations.

What investors seem to be banking on is that General Electric is going to not just meet and guide in-line, and they may be hoping for the same from Honeywell.  It is too soon to expect more dividend hikes from either company, so it may be a puzzle as to what investors really think they are going to hear this Friday.

General Electric Co. (NYSE: GE) closed out last Friday at $18.88 but Tuesday’s 2.3% to $19.34 gain seems to have created some new excitement. What investors are hoping for in specifics is a focus not on Europe and a continued improvement at GE Capital.  The year high is $21.00 and the consensus is $22.29, implying upside of 15%.  That is more expected upside than in most analyst targets to most DJIA components.  Thomson Reuters has estimates of $0.33 EPS and $34.66 billion in revenue.  Shares are indicated softer on Wednesday and everyone should be paying very close attention that 50-day moving average which is at $19.34 today.

Honeywell International Inc (NYSE: HON) is trading at $58.93 and is also close to its 50-day moving average up at $59.55.  Suddenly the charts matter here.  The Thomson Reuters consensus targets are $0.99 EPS and $9.16 billlion in revenue.  Te $58.93 compares to a 52-week range of $41.22 to $62.28 and the consensus price target from Thomson Reuters is $67.95.

3M Co. (NYSE: MMM) and United Technologies Corporation (NYSE: UTX) are both set to turn in their respective conglomerate earnings reports next week on April 24.  For 3M the pre-GE and pre-Honeywell report is $1.49 EPS from Thomson Reuters.  The price this morning of $87.45 compares to a consensus price target of $95.17 and it is worth noting that 3M is trading under its 52-week high of $98.19.

United Tech is expected to report earnings of $1.20 EPS on sales of $12.76 billion. Its $81.00 share price compares to a 52-week high of $91.83 and compares to the Thomson Reuters consensus price target of $94.70.  As it stands, this actually implies almost 17% upside expected in shares of United Tech and that makes it the most anticipated earnings report of the large-cap conglomerate stocks.

Tyco International Ltd. (NYSE: TYC) also reports next week on April 26.  This is turning into more of a “deglomerate” and because of the restructuring and break-up with the ADT spin-off we are not sure how to rank this one other than what the ticker-tape has told you.  At $54.57, the 52-week range is $37.39 to $56.66 and Thomson Reuters has a consensus price target of $60.00.  Because of the restructuring here we are just going

If GE and Honeywell both manage to please Wall Street on Friday, investors are likely going to ratchet their expectations a tad higher for 3M and United Tech ahead of earnings next week.

Stay tuned.

JON C. OGG

Apple Inc. (NASDAQ: AAPL) Cut to Neutral at BTIG.

The Charles Schwab Corporation (NYSE: SCHW) Started as Neutral at Goldman Sachs.

Eaton Corporation (NYSE: ETN) named the value stock of the day at Zacks.

E*TRADE Financial Corporation (NASDAQ: ETFC) Started as Neutral at Goldman Sachs.

F5 Networks, Inc. (NASDAQ: FFIV) Cut to Hold at Stifel Nicolaus.

Huntington Bancshares Incorporated (NASDAQ: HBAN) Reiterated Neutral at Zacks.

LinkedIn Corporation (NYSE: LNKD) Started as Hold at Needham.

Mead Johnson Nutrition Company (NYSE: MJN) Reiterated Outperform with $82 target at Credit Suisse.

Pier 1 Imports Inc. (NYSE: PIR) Maintained Hold but raised estimates at Argus.

Randgold Resources Limited (NASDAQ: GOLD) Raised to Buy at Stifel Nicolaus.

SBA Communications Corporation (NASDAQ: SBAC) Raised to Buy at Citigroup.

TD Ameritrade Holding Corporation (NASDAQ: AMTD) Started as Neutral at Goldman Sachs.

Tyco International Ltd. (NYSE: TYC) Raised to Buy at Argus.

Walt Disney Co. (NYSE: DIS) Cut to Neutral at Citigroup.

Credit Suisse has previewed top banks and noted on Bank of America Corporation (NYSE: BAC), Citigroup Inc. (NYSE: C), and J.P. Morgan Chase & Co. (NYSE: JPM): “We look BAC, C and JPM to benefit from improved trading in 1Q.” The firm talked up loan growth and demand and sees attractive valuations with improved profitability and greater capital deployment.

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American Campus Communities Inc. (NYSE: ACC) Raised to Buy at Argus.
American Electric Power (NYSE: AEP) Raised to Buy at Jefferies.
Arcelor Mittal (NYSE: MT) named as Bear of the Day at Zacks.
Citigroup, Inc. (NYSE: C) Added to U.S. Focus List at Credit Suisse.
Digital Realty Trust, Inc. (NYSE: DLR) Cut to Sector Perform at RBC.
Dunkin Brands Group, Inc. (NASDAQ: DNKN) Started as Buy at Citigroup.
Genuine Parts Co. (NYSE: GPC) named as Bull of the Day at Zacks.
Interpublic Group of Companies, Inc. (NYSE: IPG) Raised to Buy at Deutsche Bank.
LaSalle Hotel Properties (NYSE: LHO) Raised to Outperform at Wells Fargo.
Sears Holding Corporation (NASDAQ: SHLD) Maintained Underperform at Credit Suisse.
Stone Energy Corporation (NYSE: SGY) named as Value Stock of the Day at Zacks.
Tyco International. Ltd (NYSE: TYC) Raised to Outperform at Credit Suisse.
United Rentals Inc. (NYSE: URI) Started as Buy at Citigroup. 

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Bank of America Corp. (NYSE: BAC) is down 2% premarket to $7.08, relative to a 52-week range of $6.01-$15.31.

Citigroup, Inc. (NYSE: C) is down 2.5% premarket to $28.27, relative to a 52-week range of $25.40 – $51.50.

Caterpillar, Inc. (NYSE: CAT) is down 2.2% premarket to $84.00, relative to a 52-week range of $71.09 – $116.55. Raymond James downgraded the company from “strong buy” to “outperform.”

Netflix, Inc. (NASDAQ: NFLX) is up .5% premarket to $155.98, relative to a 52-week range of 140.02 – 304.79.

Tyco International Ltd. (NYSE: TYC) is up 7.35% before market open to $46.91, relative to a 52-week range of $36.28 – $53.38. The company announced it would be splitting into three parts.

Supervalu, Inc. (NYSE: SVU) is down 1.7% premarket to $7.56, relative to a 52-week range of $6.40 – $12.45. Logitech International (NASDAQ: LOGI) is down 4.4% premarket to $156.06, relative to a 52-week range of $7.85 – $23.29.

One company will be the ADT North America residential security business with annualized revenue of approximately $3 billion and approximately 16,000 employees. Naren Gursahaney, the current president of Tyco’s security solutions segment, will become the new company’s chief executive officer.

The second will be a provider of flow control products and services with annualized revenue of approximately $4 billion and approximately 15,000 employees. Patrick Decker, the current president of Tyco’s flow control segment, will become the new company’s chief executive officer.

The third company will be commercial fire and security business with annualized revenue of approximately $10 billion and approximately 69,000 employees. George Oliver, the current president of Tyco’s fire protection segment, will become the company’s chief executive officer.

What is interesting is that this move comes at a time right after rumors that United Technologies Corporation (NYSE: UTX) is out raising a large financing.  Reports over the weekend noted that the $68 billion United Tech is examining a bid for Goodrich Corporation (NYSE: GR) with a market cap of $11.6 billion.  Other companies were on the rise last week as potential buyout candidates as well.

Calls have been made for General Electric Co. (NYSE: GE) to also deconglomerize itself.  The company has made divesting moves like the NBC Universal (still partial sale) and others, although in recent months Jeff Immelt has said that he is happier with GE’s business portfolio than he has ever been.  If Immelt did not decide to break up GE shortly after the recession, he is unlikely to make such a move during better times or during less-bad times unless the benefit is overwhelmingly more.

Some conglomerates get larger while some shrink.  Former CEO Dennis Kozlowski put Tyco together by acquisition after acquisition.  His empire was taken away from him when he was ousted and sent to prison.  What remains of his former empire is now being broken up yet again.

JON C. OGG

This of course has speculation that Tyco Corporation (NYSE: TYC) could fall into the prey category, and we would caution that this is not the first time that Tyco has been in the M&A rumor mill. Honeywell International (NYSE: HON) or Textron Inc. (NYSE: TXT) could also be in the target group if you consider their size and markets.  Keep in mind that General Electric Co. (NYSE: GE) once tried to acquire Honeywell but that deal was blocked in the European Union.

Keep in mind that Diebold, Incorporated (NYSE: DBD) was given a $2.6 billion ($3 billion enterprise value) hostile buyout offer from United Tech, but that was withdrawn in late-2008 after Diebold fended the buyout off.  Its shares are now higher than when the buyout offer was first made, but the stock is still well down from its highs. Diebold was also worth more than $50 a share back in 2007.  United Tech also paid $1.8 billion to acquire GE’s security operations in 2009, which closed in 2010.

Another situation that comes to mind is the break-up of ITT Corporation (NYSE: ITT).  The market cap is ‘only’ about $8 billion and the $44.50 price compares to a 52-week trading range of $42.08 to $64.00.

Rockwell Collins Inc. (NYSE: COL) is another name which might fit in and the 6% gain to $55.33 today should actually be noted that the stock was under $48.00 as recently as this last Tuesday.

Again, the implication is that there is value in the conglomerate sector.  Taking out a loan for M&A (or for a huge buyback) is currently cheaper than it has almost ever been.  Imagine a ten-year debt financing for under 3% or 4% in annual borrowing costs for a corporation… Then add in other accretive acquisition opportunities.  The strong companies can prey on the weaker companies right now.

Our value analysis take is that GE still remains the best value in the conglomerate sector, but that is a different matter entirely.

United Technologies is not even down 1% at $74.88 on the news, and its 52-week range is $67.12 to $91.83.  The summer market drop was particularly harsh on this company.  We recently opined that United Tech could be one of the next megacap stocks (over $100 billion in stock value) and that it might it acquire its way there.  Maybe it isn’t too far off base after all.

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We have reviewed and identified the following conglomerates for our value review: General Electric (NYSE: GE), United Technologies (NYSE: UTX), Berkshire Hathaway (NYSE: BRK-A), Honeywell International (NYSE: HON), and 3M (NYSE: MMM). Also included were reviews of Textron (NYSE: TXT) and Tyco International (NYSE: TYC). ITT Corp. (NYSE: ITT) was not reviewed because of its ongoing restructuring ahead, although there may be a significant special situation still developing there. The top valuation winner will be shown after reviewing all of them.

We used a Finviz.com screening tool for year ahead estimates (next year), price-to-book ratios, and for the return on equity. We also reviewed the consensus price target objectives from Thomson Reuters to see what sort of implied upside remains if the analysts are still accurate. In most cases, we would have a fair value under most research targets today due to the headline shock factors that spook the markets each week now. We have taken a review of dividend yields and looked at many ongoing challenges in the sector today. September is said to be a cursed market month, and searching for value alone does not ever imply that the lowest dollar price on the stock has been seen.

Aetna Inc. (NYSE: AET) Reiterated Buy with $51 target at Argus.
Aixtron SE (NASDAQ: AIXG) Raised to Buy at Goldman Sachs.
Cognizant Technology Solutions (NASDAQ: CTSH) Removed from Conviction Buy List at Goldman Sachs.
F5 Networks, Inc. (NASDAQ: FFIV) Raised to Neutral at Goldman Sachs.
Green Dot Corporation (NYSE: GDOT) Raised to Buy at Goldman Sachs.
HollyFrontier Corporation (NYSE: HFC) Reiterated Buy as Value at Zacks.
Illinois Tool Works Inc. (NYSE: ITW) Cut to Underperform at BofA/ML.
International Business Machines Corporation (NYSE: IBM) Raised to Buy at Goldman Sachs.
Lexmark International Inc. (NYSE: LXK) Cut to Sell at Goldman Sachs.
MeadWestvaco Corporation (NYSE: MWV) Raised to Buy at BofA/ML.
NetApp, Inc. (NASDAQ: NTAP) Raised to Overweight at Piper Jaffray.
Optimer Pharmaceuticals (NASDAQ: OPTR) Maintained Outperform as Bull of the Day at Zacks.
Oracle Corporation (NASDAQ: ORCL) Raised to Top Pick at FBR.
Pier 1 Imports, Inc. (NYSE: PIR) Cut to Equal-Weight at Barclays.
Tyco International Ltd. (NYSE: TYC) Raised to Buy at BofA/ML.
Under Armour, Inc. (NYSE: UA) Raised to Outperform at FBR.
Unisys Corporation (NYSE: UIS) Cut to Underperform as Bear of the Day at Zacks.
Visa, Inc. (NYSE: V) Raised to Conviction Buy List at Goldman Sachs.
VMware Inc. (NYSE: VMW) Raised to Outperform at Credit Suisse.
W.W. Grainger Inc. (NYSE: GWW) Raised to Buy at BofA/ML.

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JON C. OGG