The company may be subject to the timing of major projects, as well as market trends, for improved results from these businesses. Management has not focused substantial resources on expansion of its construction-related segments. For that matter, it is not investing in R&D for those product lines to a great extent. It is taking restructuring measures, allowing for margin improvements, however.
To put it into numbers, Otis, together with United Technologies Corporation (NYSE:UTX)’s Climate Controls and Security arm, posted a 1% decline in operating profits for the March quarter, while United Tech watched its Aerospace Systems business soar. When it all comes together, United Technologies Corporation (NYSE:UTX) is an exceptional company. As such, it is a good purchase for long-term buy and hold investors and those banking on near-term momentum from its aerospace units.
The Architectural Billings Index, a measure of design and construction activity, has remained on the upturn, albeit slowly. Should this metric start to climb (note that any number above 50 indicates improvement), commercial construction would be on the cusp of a more visible growth stage. Investors may want to accumulate shares of these companies while valuations are below the market average, and thus benefit from such an event.
The article Buys for Commercial and Industrial Construction Exposure originally appeared on Fool.com and is written by Damon Churchwell.
Damon Churchwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Damon is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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