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Sunday, 10/03/2004

Reading Between the Lines
By Nich Sheldon
TXT - Textron, Inc

Company Description

Textron Inc. is a $10 billion multi-industry company with more than 43,000 employees in nearly 40 countries. The company leverages its global network of aircraft, industrial and finance businesses to provide customers with innovative solutions and services. Textron is known around the world for its powerful brands such as Bell Helicopter, Cessna Aircraft, Kautex, Lycoming, E-Z-GO and Greenlee, among others. More information is available at www.textron.com.

[Source: Company Press Release]

Reasons to Invest:

This week's DOTW is soaring over its competition. The company has been landing contracts left and right, and all the news surrounding the company is geared towards greatness. The stock is a little more pricey than most of the DRIPs that I have featured on DripAdvisor.com for the past couple months, but with a minimum investment of $25 a year to $12,000 a year bodes well for those dividend investors that have less investment income to designate to their portfolio. Without further ado, this weeks Drip of the Week is Textron, Inc (NYSE: TXT).

On July 22nd, Cessna Aircraft Company, a subsidiary of Textron, announced that TAG Aviation USA, Inc sold half of its ownership interest in CitationShares Holding, L.L.C. to the company. This boosted Cessna's ownership from 50% to 75%, giving them more income to develop new technologies, which could help boost Textron's balance book.

On the same day, Textron landed a $230 million contract from its Bell Helicopter division, which sold 26 twin-engine helicopters to Pakistan in Support of the War on Terrorism.

On July 29th, Textron Marine & Land (a fully owned subsidiary of Textron) was awarded a contract by the United States Project and Contracting Organization. The contract was to manufacture additional Armored Security Vehicles on behalf of the Iraqi Minister of Interior. It's estimated to be worth approximately $50 million for the production of 43 Armored Security Vehicles to the newly formed Iraqi Civil Intervention Force and will be employed in the ongoing effort to provide security and stability in Iraq.

On August 19th, TXT was granted yet another multi-million dollar contract ($49.4 million), supplying Lidar Application for Vehicles with Analysis (LAVA), by the Air Force Research laboratory's Directed Energy Directorate at Kirtland Air Force Base in Albuquerque, New Mexico.

I am listing all of the contracts for one simple reason. The fact is that Textron's stock has been picking up steam throughout 2004, even though their financials have not been that impressive. Early in the year the company was seeing its net sales and net income declining due to lower Citation business jet volume and lower demand, as well as higher special charges and a reduction of gain on sale of business. Now that the third quarter has been laced with contracts galore, it appears that Textron will more than likely announce earnings in the green, which bodes even better for a continuation of the rise in their stock.

The stock closed on October first at 65.47 and according to their Point-and-Figure chart, Textron has a bullish price object of 84.00. If the stock can fly into the 80 range, we will have an absolute return of approximately 30%.

Over the past 52-weeks of trading, TXT has gained 60.47%. In fact a year ago this Thursday, the stock was trading at $40.65, and like I said, the last few quarters have been a little weaker than expected. Keeping that in mind, what do you think a few in-line, or better than expected earnings will do for Textron?

Textron has been flying through a nice regression channel that has served as support and resistance for the stock for the entire year. According to the daily MACD indicator, TXT just produced a fresh buy signal, and rightly so, since the company has tacked on more than 3 points in its past week of trading. I am forecasting more of the same over the course of the next year.

Textron has an annul dividend yield of 2.02 percent, or $1.30, per share owner, per year.

This ends another exciting episode of the DripAdvisor.com Drip of the Week. Stay tuned next week, as we will spotlight another stock worthy of the DripAdvisor.com limelight.

Remember:
Plan your trade, and trade your plan.

Until Next Week,
Nich Sheldon
Editor In Chief
www.dripadvisor.com
questions@DripAdvisor.com

Broker Recommendations

Strong Buy         3
Buy                4
Hold               6
Sell               1
Strong Sell        0

Brokers Covering  14


DRIP Information:
Shares to Qualify = 1
Auto-reinvestment = Yes
Accept Foreign Accounts: Yes
Temper Enrollment: Yes

Min/Max Investment = $25-$12,000/year


Reinvestment Fees - 
Dividend investment fees: $0.00
Cash investment fees: $0.00
Auto reinvestment fees: $1.00


Transfer Agent:
First Chicago Trust
800-519-3111


Corporate Headquarters:
40 Westminster Street
Providence, RI 02903
Phone: (401) 421-2800
Fax: (401) 421-2878



 
 

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