EOT Trade Alert – June 12, 2012

| June 12, 2012

June 12, 2012

Trade Alert:

   Buy UTX August $77.50 2012 calls at $1.85 or better

Company Background:

United Technologies (UTX) is a $54 billion diversified conglomerate.  United Technologies provides technology products and services to the building systems and aerospace industries worldwide.  UTX operates in many key segments.  These segments design, manufacture, sell, and install passenger and freight elevators, escalators, and moving walkways.  In addition, they offer heating, ventilating, air conditioning, refrigeration systems, and energy-efficient products for residential, commercial, industrial, and transportation applications.

Short-Term Catalyst:

It’s Greece.  And China.  Now it’s Spain.

Despite the fundamental attractiveness of many stocks, there’s no shortage of global uncertainty that can unnerve the market on any given day.  Unfortunately, many fundamental investors seem like Kevin Bacon in Animal House because their trying to calm a panicked crowd.

However, there is a practical way to handle the current market uncertainty.

To no surprise, investing in all-weather stocks can help traders navigate through the choppiness.

And UTX is one such company that fits the bill.

United Technologies is a well diversified aviation and building manufacturer.  Over the past decade, they’ve provided a consistent average annual revenue growth of 8%.

And simultaneously, average annual earnings have grown 12.5%.

You see, given the large backlog cycle for new commercial aircraft at Boeing (BA) and Airbus, UTX should achieve double-digit earnings growth over the next three to five years.

Now looking ahead, I expect UTX’s top and bottom revenue to be driven higher by a new aviation cycle and the continued build-out of global infrastructure in emerging markets.

Bottom line…

While investors continue to worry over a global macro slowdown, management has been quietly repositioning the overall franchise.  They’ve been able to focus on the continuing strong growth of infrastructure build-outs in emerging markets throughout Asia, Latin America, and even Europe.

Desirable products in strong demand markets should keep UTX moving forward steadily and reliably, despite current market conditions.

Let’s grab call options on UTX to profit from increasing demand for their diversified products and services.  When everyone jumps back in, we’ll be sitting pretty.

Trade Details:

Underlying Stock Symbol: UTX
Current Bid-Ask Price: $1.71 – $1.76
Option “Buy Up To” Price: $1.85
Break-Even On Stock At Expiration: $79.35
Maximum Risk Per Contract: $185

Exit Strategy:

UTX is currently trading at $74.32 per share.  Resistance levels will be at $82.50 and again at $87.50.  Don’t forget, we want this stock to move higher.  Support levels will be at $70 and $67.50.  Conservative investors should look to exit at the first support or resistance level.  Aggressive investors may want to hold for a bigger move.




Category: EOT Trade Alert

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