Pure-play Raytheon is set to take off

Article Excerpt

United Technologies (now Raytheon Technologies following its merger with Raytheon Co.) was our top Conservative pick for 2020. We liked that the merger, along with the spinoffs of Otis and Carrier, created a pure-play aerospace leader. Those moves also cut the old company’s exposure to commercial airline customers, many of which have reduced their spending on new equipment due to COVID-19’s spread. Uncertainty over the pandemic has delayed some of the benefits of the transformation. However, the rollout of COVID-19 vaccines should let commercial air travel volumes recover in 2021. The new company will also realize more savings from the merger. That should let it reward investors with share buybacks and higher dividends. RAYTHEON TECHNOLOGIES CORP. $78 is a buy. The company (New York symbol RTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.5 billion; Market cap: $117.0 billion; Price-to-sales ratio: 2.1; Dividend yield: 2.4%; TSINetwork Rating: Above Average; www.rtx.com) took its current form on April 3, 2020, with the merger of United…