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.

February 2, 2009 - 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 elevators, escalators, and moving walkways. Its Carrier segment manufactures and distributes residential, commercial, and industrial HVAC and refrigeration systems and equipment; food service equipment; building automation and controls; and HVAC and refrigeration components, as well as provides retrofit and aftermarket services.

Its Pratt and Whitney segment provides commercial, general aviation, and military aircraft engines; parts and services; industrial gas turbines; and space propulsion systems.

The company's Hamilton Sundstrand segment offers aerospace products and aftermarket services, including power generation, management, and distribution systems; flight, engine control, environmental control, fire protection and detection, and auxiliary power units and propeller systems, as well as industrial products, including air compressors, metering pumps, and fluid handling equipment. This segment also offers aftermarket services, such as spare parts, overhaul and repair, engineering and technical support, and fleet maintenance programs.

Its Sikorsky segment provides military and commercial helicopters, aftermarket helicopter, and aircraft parts and services. United Technologies Corporation also engages in the development and marketing of distributed generation power systems and fuel cell power plants for stationary, transportation, space, and defense applications. The company was founded in 1934 and is based in Hartford, Connecticut.

Sales and profits in 2007 came from these divisions: Pratt & Whitney (makes and services aircraft engines) 22% of revenues and 27% of operating profits; Carrier (makes heating, vnetilating and air-conditioning equipment) 27% and 18%. Otis (elevators) 22% and 31%; Sikorsky (helicopters) 9% and 5%; Hamilton Sundstrand (electronic controls) 10% and 13%; UTC F & S (security and fire protection services) 10% and 6%. International sales were 52% of all revenues in 2007.

Earnings have been growing. 2008 finished strong with a total of $4.90 a share, up from $4.27 in 2007. For 2009 and '10, analysts see lower numbers: $4.66, then up to $4.86 if a recovery begins later this year.
Fourth quarter earnings were out last week. Net income was up 8% from the same quarter last year to $1.23 a share. Revenue, however, was a bit lower at $14.5 billion, compared to $14.7 billion last year. The CFO, Greg Hayes, had this to say about future prospects:
"While there is optimism that the world's commercial airlines will be profitable in 2009 due to lower jet fuel prices, global air traffic may be down 3% to 4% versus the range of plus or minus 1%, which we anticipated in December. The business jet market is also weakened. With fewer departures and reduced OEM rates, there will be more pressure on Pratt& Whitney Canada." For 2009, the company intends to accelerate its restructuring plans to cut costs, launching about $150 million of actions in the first quarter.

So 2009 isn't going to break any records. In fact, it will most likely be a little below 2008's results. But there's still plenty of reason for conservative investors to consider this blue-chip member of the Dow Jones Industrial Average.

First, there's a decent dividend of 3.2%, a dividend the company should have no trouble paying since it takes only 28% of profits. Second, analysts still see growth, predicting an average annual increase in sales of 7% and profits of 10% over the next 5 years. Third, the beta (a measure of how the stock's price performed compared to the S&P 500 over the last year) is at .9, meaning it didn't go down as far as the rest of the market in the dip of October and November. It also says that when the market rallies, UTX will go up less than the index stocks by .9. Another reason for consideration is the company's Financial Strength, rated by Value Line at A++. Return on Equity is a remarkable 25%. Lastly, there is an extremely aggressive stock buyback program with analysts estimating about $3 billion spent on purchasing shares in 2008.

Some of the concerns for UTX: Because foreign sales are the majority of its revenues, the dollar strength or weakness affects the bottom line. That was the case in the fourth quarter as the dollar strengthened against most currencies and adversely affected earnings by 6 cents a share. Another hit to earnings will most likely come from higher pension costs. And lastly, earnings aren't going to increase significantly unless the global economy gets healthy.

More numbers: Trailing P/E is 9.75, Forward P/E is 9.84. The average annual P/E over the last 5 years was close to 15. Price to Sales is .75 while Price to Book is 2.78. Operating margin for the last 12 months was 12.99% and Profit margin was 7.99%. Return on Equity for the last 12 months was 25.16%. There's $4.33 billion in cash for $4.69 a share. Total Debt is $11.48 billion; total debt to equity is .72. Current ratio is 1.24. Book Value per share is $17.26. There are 922 million shares outstanding. The dividend is $1.54 for a yield of 3.2%.

United Technology should be of interest to investors looking for a diversified manufacturing and servicing company with wide sources of revenues. While the global economy is slowing, the company is working on cost savings and buying back stock. Those efforts should lead to decent earnings per share, even in these difficult times. When demand picks up again, the company should get back to good gains in sales and profits.

- Company Web site: www.utx.com

- Ted Allrich