You don’t often hear a lot about United Technologies Corporation (UTX) these days; it’s an old economy name that doesn’t seem to garner much attention from the media.
Nevertheless, the company that makes elevators, helicopters, airplane engines, and HVAC (heating, ventilation, and air conditioning) and fire/security systems continues to perform excellently. It’s a component of the Dow Jones Industrial Average, and the stock’s had an exceptional year. (See “The One Market Sector That’s Consistently Outperforming the Rest.”)
Approximately $17.0 billion of the company’s total sales in 2012 came from its “UTC Climate, Controls and Security” business. Next was “Pratt & Whitney” aircraft engines at $14.0 billion. “Otis” elevators and escalators brought in $12.0 billion in sales last year, followed by “UTC Aerospace Systems” at $8.3 billion and “Sikorsky” helicopters at $6.8 billion.
As a conglomerate with a strong constituent in aerospace, United Technologies has an excellent track record of increasing its dividends to stockholders.
In 2012, the company increased its common share dividend by a total of 11.5%, representing its 76th consecutive year of paying dividends. According to the company, from fiscal year-end 2002 to year-end 2012, United Technologies delivered a 225% total return to shareholders, which is … Read More
When we last looked at Alaska Air Group, Inc. (ALK), the position had pushed to a new record-high on the stock market, and it’s doing so again.
Many Dow Jones transportation stocks continue to exude price strength and in my mind, this action is one confirming factor that the broader stock market can go higher.
There has also been a spike in countless new initial public offerings (IPOs), which only makes sense with the stock market at an all-time high and the world awash in liquidity.
But it is difficult to consider buying stocks right at their highs. If one came into money and wanted to create a stock market portfolio, there’s not a lot of value for your investable dollar. Even income-seeking investors have to contend with high prices for the best dividend paying stocks.
Big investors have been buying dividend-paying blue chips all year and are likely to continue doing so unless there’s a catalyst to sell.
Automatic Data Processing, Inc. (ADP) just announced a solid 10% increase in its cash dividend to stockholders. The company will pay $0.48 a share, up from the previous $0.435 per share, on January 1, 2014 to shareholders of record … Read More
In late February, we took a look at Drew Industries Incorporated (DW) out of Elkhart, Indiana. The company is a major component supplier to the recreational vehicle (RV) market and also sells to the manufactured homes market.
The RV market has been experiencing a significant upswing in business conditions. Drew Industries’ total sales are 87% in the RV segment, and the company just reported another solid quarter of growth.
For the company, 2009 was a very tough year. Net sales dropped by more than $100 million compared to 2008, and the company incurred a major net loss. But business conditions turned around in 2010, and have been especially good over the last two years.
During the Great Recession, the company’s 2009 sales dropped to $398 million. By 2012, total sales were a record $901 million, which is a pretty significant turnaround for any business.
Last year Drew Industries returned $45.0 million to shareholders with a special cash dividend of $2.00 per share. Between 2001 and 2012, the company quadrupled its content per travel trailer and fifth-wheel RV. Drew Industries now operates 31 manufacturing facilities in 11 states.
Drew Industries’ five-year stock chart is featured below:
Chart courtesy of www.StockCharts.com
Drew’s … Read More
If you are a stock market investor, you’ve probably come to the same realization I have: the stock market is behaving irrationally. These days, the fundamentals don’t really matter. What’s even more frustrating is that when you do talk about the fundamentals behind the market’s continued advance missing, you are ridiculed.
Soft revenues at public companies are just one area of concern. As of October 25, 244 companies on the S&P 500 have reported their third-quarter corporate earnings; only 52% of them registered revenues above the expectation, which means companies are selling less than they expected—not a good sign. Third-quarter corporate earnings growth is now expected to be just 2.3%. A month ago, the same number stood at an even three percent. (Source: FactSet, October 25, 2013.)
We are seeing some of the well-known bears of the stock market turning bullish. “Dr. Doom” is suggesting investing in stocks, and others like David Rosenberg, who has been bearish for years, are turning bullish.
Is this the peak optimism?
As it stands, investors believe the stock market is a safe place to be again. The charts of key stock indices only show an upward trajectory.
Chart courtesy of www.StockCharts.com
What will … Read More
I harp on about this over and over again: economic growth is when the average consumer is optimistic about their future; they are spending money, they know they will have a job tomorrow, and they are saving. In the U.S., we are seeing the opposite of all this.
In fact, consumer confidence in the U.S. continues to plummet; the Conference Board Consumer Confidence Index, an indicator of consumer spending, plunged more than 11% in October from September. (Source: Conference Board, October 29, 2013.)
But the misery doesn’t just end there for consumers in the U.S. economy. They are struggling to even buy the most basic of needs—food.
According to a recent study by the United States Department of Agriculture (USDA), in 2012, 17.6 million households in the U.S. economy were “food insecure”—they had difficulty bringing food to the table due to a shortage of resources. (Source: United States Department of Agriculture, September 2013.)
And as a result of so many Americans having trouble putting food on the table, it is costing taxpayers significantly. According to the U.S. Senate Budget Committee, over the last five years, the U.S. government has spent $3.7 trillion on 80 different poverty and welfare programs. The … Read More
The auto industry is back on its feet again, following some lean years during the recession in 2008 when General Motors Company (NYSE/GM) had to be saved by the government. And whether you agreed with General Motors (GM) being bailed out or not, the reality is that the company has rebounded via massive restructuring and better leadership with a stronger vision of where the company should be headed. Moreover, GM now employs over 210,000 people, which may not have been the case if the automaker had been allowed to fail.
GM is now a $50.0-billion company, and while it is no longer the stock market leader in its backyard, the company has been able to grow a very healthy and viable business in China, where GM is the country’s top foreign automaker. Apparently, the Chinese love their GM vehicles and associate the brand with prestige and quality. (Imagine that! Maybe Americans are missing out…)
Chart courtesy of www.StockCharts.com
For GM, China was the path to recovery. The country has invested billions of capital into the world’s largest auto market and so far, it has paid off.
In fact, GM now sells more vehicles in China than domestically. In the … Read More
These days, central banks are on a very dangerous monetary policy path. Paper money printing has become the norm. Major central banks around the world are taking the same actions; they have learned the phrase “quantitative easing” well. Economy’s soft; no problem! We’ll just print more money so our currency falls in value and our exports rise! (If only it were that simple.)
Two central banks are at the forefront when it comes to implementing paper money printing: the U.S.’s Federal Reserve and the Bank of Japan. And it isn’t a secret how poorly these two nations are faring despite their quantitative easing efforts.
In these pages, I have been very critical of quantitative easing.
With that said, to date, I have only heard one senior financial politician and one central bank head criticize the use of quantitative easing.
Canada’s Finance Minister, Jim Flaherty, at a private dinner with his G20 equals this week, criticized the use of quantitative easing by the U.S. central bank. The following day, he said, “It’s not good public policy.” He said the U.S. should have never implemented quantitative easing, but “Now that they’ve done it, they should get out of it as … Read More
If companies in key stock indices are beating their earnings estimates, it’s because they are beating already lowered expected earnings. What’s the biggest problem with the corporate reports I’m seeing? Revenue growth is disappearing.
What we have seen so far:
International Business Machines Corporation (NYSE/IBM) reported third-quarter corporate earnings per share were up 11% from the same period a year ago, but revenues fell four percent from the third quarter of 2012. (Source: International Business Machines Corporation, October 16, 2013.)
The Goldman Sachs Group, Inc. (NYSE/GS) reported corporate earnings of $2.88 per share for the third quarter of 2013. In the same period of 2012, corporate earnings were $2.85 per share. And revenues plunged 22% from the second quarter! (Source: Goldman Sachs Group, Inc., October 17, 2013.)
What we have seen so far in respect to the earnings of big public companies isn’t anything impressive. In fact, it’s just more evidence pointing to key stock indices running on nothing but propped-up earnings due to stock buyback programs made largely possible by easy monetary policy.
Going forward, I just expect to … Read More
What the heck is with this stock market? The ability of the stock market to hold and avert a major correction over the past two weeks and then follow this with an upward move on the charts is a surprise—at least in my view it is, as it clearly shows the bullish bias controlling this stock market.
The NASDAQ and Russell 2000 are at new recent highs as the desire for growth by investors continues, which has largely been the story this year.
The S&P 500 is within striking range of its September record high.
The focus on the debt ceiling is important but also way overdone, in my opinion, given that we are in the midst of the third-quarter earnings season and, well, it has been subpar early on.
Yes, it’s still early in the earnings season, but I expect more subpar results. Of course, what I expect doesn’t matter—momentum and speculation are what drive this stock market.
So far, about six percent of S&P 500 companies have reported, and a dismal 55% of these companies have beaten estimates. That’s just not good. The results are also well below the historical average at just over 60%, and to … Read More
No one wants to hear this…
The most basic factor of economic growth in this country, consumer spending, is flashing a warning sign about the U.S. economy.
According to Gallup, weekly U.S. economic confidence for the week of September 30 to October 6 plummeted the most since the Lehman Brothers’ fall in 2008. The index suggests consumer confidence is down significantly since mid-September, and it now stands at the lowest level since December of 2011. (Source: Gallup, October 8, 2013.)
Unfortunately, Gallup’s confidence index is not the only indicator suggesting consumer spending is plummeting. The Thomson Reuter/University of Michigan’s preliminary consumer sentiment index for October declined to 75.2 from 77.5 in September—the lowest figure since January of this year. (Source: Reuters, October 11, 2013.)
And companies that are dependent on consumer spending are seeing a downtick in sales. Take The Gap, Inc. (NYSE/GAP), for example. The company reported a decline of three percent in same store sales for the month of September. In the same period a year ago, the company’s same store sales were up three percent! (Source: The Gap, Inc., October 10, 2013.)
I’m not shocked at all when I see statistics that show consumer spending is … Read More
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