There are no safe havens in the stock market. Every stock carries risk. But some less than others. This column features stocks that have shown one or more of the following characteristics: less volatility, better earnings, larger market caps, safe and increasing dividends. In these times of turmoil, our goal is to show readers better opportunities for investing with fewer risks.

July 26, 2010 - United Technologies Corp. (UTX-NYSE) provides technology products and services to the building systems and aerospace industries worldwide. The company's Otis segment designs, manufactures, sells, and installs passenger and freight elevators, escalators, and moving walkways. United's Carrier segment provides HVAC and refrigeration solutions, including controls for residential, commercial, industrial, and transportation applications.

United's Pratt & Whitney segment supplies aircraft engines for the commercial, military, business jet, and general aviation markets. It also manufactures aerospace propulsion systems for the U.S. space shuttle program.

The company's Hamilton Sundstrand segment supplies aerospace products, such as power generation, management and distribution systems, flight systems, engine control systems, environmental control systems, fire protection and detection systems, auxiliary power units, and propeller systems; and industrial products, including air compressors, metering pumps, and fluid handling equipment.

United let investors down in 2008. Analysts predicted $4.66 a share for earnings. It delivered $4.12. That took the stock from $77.10 at the beginning of the year to $41.80 by December. In 2009, the slippage continued until the stock bottomed at $37.40. By the end of the year, it traded up to $70.90, then ran to $77 in 2010. It took a little breather. Now it's back on an upward trend. Here's why.

Its commercial business is growing. Order levels are up through June which should make the second half of 2010 read better than originally thought. Specifically, Pratt & Whitney commercial jet engine maintenance and repair operations are seeing more demand. So, too, is the UTC Fire and Security division. Other groups are also taking more orders, ones like Otis elevator where tickets are being written faster, especially in China. The U. S. market remains weak, and if the U.S. dollar stays relatively strong agains the Euro, expect fewer sales in Europe the rest of this year.

Analysts predict earnings will finish at $4.69 (that's a consensus from 20 where the range is $4.55 to $4.95). Next year, they see $5.34. For the quarter ended in June which was just reported, earnings came in a little above the consensus estimate: $1.20 vs $1.16. For the third quarter, expect $1.28 vs $1.14 last year in the third. For the fourth quarter, look for $1.31 compared to $1.15 last year in the fourth. Earnings gained an average of 7.8% annually over the past 5 years. Analysts see annual average growth of 10.36% in the next 5.

Revenues should show the same bounce earnings did. In 2009, they dropped to $52.920 billion from $58.681 billion in 2008. This year, analysts see the total at $54.48 billion, then $57.22 billion in 2011. Over the last 5 years, revenues averaged an annual increase of 12.5%. For the next 5, expect 4.5% a year, on average. Breakdown by divisions for 2009 sales: Pratt & Whitney (24%); Otis elevator (22%); Carrier (21%); Sikorsky (12%); Hamilton Sundstrand (11%); UTS F&S (10%).

Since the air travel market is flying fairly high these days, expect Pratt & Whitney to prosper. Maintenance on existing engines will increase and outright engine sales into the commercial aftermarket will as well. In the Fire and Security division there's been a new addition as of March 1: GE Security. Expect operating income to grow by 50% here, but interest costs may rise to offset much of that gain.

In the air conditioning unit, Carrier, costs have been chopped and a restructuring put into effect with the possibility of a 20% increase in profits. And the military is spending heavily on helicopters, which should bode well for the Sikorsky division. Look for a gain of 15% to 20% in profits from this group. While a stronger U.S. economy should help the commercial divisions in 2011 and beyond, the company's military sales, particularly in Pratt's military engine business, should expect a slowing.

In the first quarter, UTX spent $2.1 billion on acquisitions. Expect about $3 billion total for 2010. With plenty of cash ($5 billion), the company has room for other things as well, like increasing the dividend or buying back shares.

More numbers: Trailing P/E is 16.17 while Forward P/E is 13.39. Price to sales ratio is 1.21. Price to book is 3.24. Book value is $21.90. Operating margin for the last 12 months was 14.61% while Profit margin was 7.69%. Return on equity was a strong 22% and Return on assets was 8.49%. Total cash per share is $5.49. Total debt is $12.06 billion or 32% of capital. Current ratio is 1.30. The stock is up 35.75% in the last 12 months. The S&P 500 is up 12.60% in the same time. There are 910 million shares outstanding. Institutions own 82.80% of them. The annual dividend is $1.70 (up from $1.54 last year) which is a yield of 2.40%. The stock will be ex-dividend on August 18. Pay date is not yet known.

UTX is a solid stock. The price reflects that. Investors were disappointed in 2008 but they came back with love in 2009. Now the stock seems fully valued. But if the global economy, including the U.S., finally gets going, expect all earnings estimates to go higher. Conservative investors should like all the cash here and the bright prospects. They just might want to wait for a lower price before they get too serious about buying it.

- Company Web site: www.utx.com

- Ted Allrich