Phillips 66 benefits from the tax-advantaged structure while still operating a more diversified operating business that also contains many assets that are not ideal MLP assets, such as its fast-growing chemical manufacturing business and its super-profitable refined products marketing business.
After Phillips 66 posted stellar results for the latest quarter, Goldman Sachs said:
Phillips 66 remains our top idea within our Refining coverage, where we continue to see headroom for incremental capital returns this year, are constructive on a positive rate of change at Refining in 2022, and continue to see attractive nonefining value in Midstream, Marketing, and Chemicals.
Investors are paid a very solid 4.16% dividend. The Goldman Sachs price target of $109 is less than the $114.15 consensus target for Phillips 66 stock. The $89.46 close on Wednesday was even lower.
Raytheon Technologies
This top aerospace and defense idea has a diversified mix of businesses. Raytheon Technologies Corp. (NYSE: RTX) is an industry leader in defense, government electronics, space, information technology and technical services.
With a history of innovation spanning 97 years, Raytheon provides state-of-the-art electronics, mission systems integration, C5I products and services, sensing, effects and mission support for customers in more than 80 countries.
In 2020, United Technologies and Raytheon agreed to merge their businesses to create this new aerospace and defense powerhouse. The two-year-old merger, combined with the spin-off of the Carrier and Otis divisions in 2020, has top analysts across Wall Street expecting free cash flow to step up in a big way this year. Toss in the solid recovery in air travel and improving sentiment that could help drive the commercial aerospace business.
The dividend yield is 2.39%. Goldman Sachs has a $108 price objective. The consensus was last seen at $110.06. Raytheon Technologies stock ended Wednesday’s session at $89.75.
The market is running out of gas, and running out fast, and will face some strong headwinds. Not the least of which will be continued high energy prices when the weather starts to turn cold in a couple of months. Toss in some aggressive interest rate hikes the rest of the year, and we could be in for some strong turbulence going forward. All these stocks can weather those potential storms better than most.
Originally posted at 24/7 Wall St.
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