We only want to buy stock when there is a price break and then the price break occurs and we don't want to take the plunge.
Right now, we have a tremendous decline in the stock of United Technologies (UTX) without anything being wrong with United Tech per se. It did shell out $23 billion in cash and stock -- two thirds/one third for -- Rockwell Collins (COL) , a $140 price tag that may be just a 17% premium from where the stock had been a month before.
It's a price that everyone and his brother seems to think is an overpay. I get that. I have loved the target company for ages, even suggested that people who were tired of Boeing (BA) -- not me -- swap in COL.
But now, down $10 from where it was when the deal was announced, United Technologies, to me, seems like a screaming buy.
Think about it. The company told you that 2017 is a done deal. It pretty much said 2018's great, too. 2019? That's when the accretion kicks in.
Now, it would be one thing if the aerospace cycle is peaking. But with 30,000 planes on order, with the middle-classification of airline travel, with the flush nature of the business, nobody's saying that.
It would also be a big issue if Otis, the elevator company, were doing badly. Again, not the issue. It's having a comeback. Or the HVAC business? Again, very strong. Military? On fire.
What I am saying is that an issue at $119 is not an issue at $109. The punishment has been meted out. The opportunity, which I had the luxury of sitting out last week because I was on vacation, is now here.
I think the first leg should be bought here. Next would be down another four. Somehow, though, without a broader selloff, I don't think it gets there.