NEW YORK (TheStreet) -- TheStreet's Jim Cramer and Stephanie Link are adding United Technologies (UTX) to their Action Alerts PLUS Portfolio. Cramer likes the company because it purchased Goodrich, streamlined it and returned cash to shareholders. He says this is the opposite of Twitter (TWTR), which has spent like mad with no return on investment.
Cramer also likes companies with secular tailwinds such as aerospace that are doing well overseas, and United Technologies fits the bill thanks to its presence in China. He calls the Goodrich acquisition "brilliant" because the company doubled down on aerospace, which is in a secular bull market.
Link also likes United Technologies' exposure to construction.
TheStreet Ratings team rates UNITED TECHNOLOGIES CORP as a "buy" with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITED TECHNOLOGIES CORP (UTX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, UTX's share price has jumped by 29.32%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 2.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 92.36% to $1,335.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 51.99%.
- The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that UTX's debt-to-equity ratio is low, the quick ratio, which is currently 0.70, displays a potential problem in covering short-term cash needs.
- UNITED TECHNOLOGIES CORP's earnings per share declined by 5.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, UNITED TECHNOLOGIES CORP increased its bottom line by earning $6.22 versus $5.35 in the prior year. This year, the market expects an improvement in earnings ($6.85 versus $6.22).
- You can view the full analysis from the report here: UTX Ratings Report