Q: What makes Textron's valuation attractive?

A: The stock trades at just about 20 a share, and their earnings for next year will probably be less than $1 a share. It has a P/E that's high because of the cyclically depressed nature of the earnings. We believe that the company can earn closer to $2 going out several years, as soon as the turnaround that management is starting to put into place becomes better recognized and as their businesses slowly begin to improve. They have done a lot to improve their liquidity profile, mainly by restructuring some of the near-term maturities on their balance sheet. Their finance company is seeing good progress in terms of beginning to deal with some of the problems that they have had. And if you look at the components of Textron's business, whether it is Cessna, Bell Helicopter or the defense systems, margins are very depressed, particularly in business jets, but those margins can improve over time.

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"Take the curious case of Textron (TXT). I look at this company, with severe monumental losses in finance and a big reliance on business jets plus a heavy auto component -- this company should have failed. It should have been forced to go bankrupt. Instead, like so many other troubled companies, it was able to do an equity offering and work its way through this period. Now it has an analyst meeting on Sept. 10, and JPMorgan said yesterday, "We continue to view Textron as one of the last value plays in the sector." Can you believe it? Deathbed to best buy!" "Where Are All of the Bankruptcies?" Aug. 28, 2009

Pension

These secondaries are proving to be land mines all of a sudden. Take the Textron (TXT) secondary at $10.50. You had a nice gain going there for a while, but that's just vanished.

"No. We need to see their CEO resign. Until then we're not going to see that one move." "'Mad Money Lightning Round': Take a Ride on Union Pacific," 6-12-09

My company

Aircraft Mfg exposure

like the company

admist heavy selling pressure, has kept its gains lately. strong insider buying, basing formation, and book value only 1 dollar per share above current price.