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Tickers in this Article: GE, UTX, HON, TYC
Conglomerates or diversified companies tend to be bypassed by many because they can be too complicated to understand or because many investors prefer companies that are laser like in their focus on one particular business. But there is value in companies that pursue opportunities in an array of worthy businesses. We'll look at the reasoning behind this via one of my favorite conglomerates, General Electric (NYSE:GE), ahead of its second quarter earnings results, due out on July 16th.

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Why Diversified Equals Opportunity

When a company has a presence in multiple business there can indeed be risk. There are often multiple balls in the air and there can, at times, be multiple fires to put out. As mentioned above, however, there is sometimes opportunity too. For example, if one business were to slowdown or stumble, then the other businesses or services - depending on the company - could pick up some of that slack and continue to generate revenue for the overall organization. My favorite conglomerate is none other than Farfield, Connecticut based General Electric.

Why GE Is Worthy Of Attention
General Electric stands out to me mainly because it is a company that can ultimately grow along with the United States economy in time. Sure, things are difficult right now. However, as our nation emerges from these difficult times, people will increasingly want things like appliances and lighting products, and the demand for pricier good like engines should lift as well. On the earnings front, GE has also been impressive as it has consistently, despite some very difficult times and a difficult environment, exceeded sell-side estimates. As for the company's second quarter, Wall Street expects the behemoth to earn 27 cents per share, and I think it could potentially earn as much as 30 cents. Another very attractive feature to me is that the estimates for this year have been rising, which can gain a company extra attention. Specifically, I would point out that the data indicates that 60 days ago Wall Street had expected the company to earn $1.02 a share for this year and now it expects $1.09 per share.

In short, in mid April when the stock was trading at over $19 I thought that the stock could have solid upside potential over the longer term horizon. The recent sell off makes me think that this is still a great opportunity. General Electric is not the only conglomerate or diversified company that is worthy of attention.

Other Plays
Tyco (NYSE:TYC), based in Switzerland, is heavy in safety products and flow control (valves and controls) products. Tyco, however, hasn't been twiddling its thumbs or passing time as of late. In fact, it beat estimates in three of the past four quarters that were reported, which deserves props in this environment. As for future growth, data shows Wall Street analysts expects the company to grow in excess of 12% per annum in the next five years. Certainly worthy of attention.

Honeywell (NYSE:HON) is another company that comes to mind because it has its hands in a product I use almost everyday, thermostats. It's also in the security solutions business. As for earnings, it has exceeded expectations in the last three quarters. It isn't extremely cheap at 16.6 times this year's estimate, but it is a good value given this company's potential to grow as this economy eventually shifts into a higher gear - and I hope it will soon.

Finally, United Technologies (NYSE: UTX), known for its very popular aircraft engine business, elevator business and of course its helicopter business trades at under 14 times this year's estimate and has exceeded expectations and impressive four quarters in a row according to the data that is out there. In short, this stock looks attractive, given the recent sell off.

Bottom Line
Conglomerates don't receive anywhere as much attention as they should in my opinion. This is an attractive space, and again my favorite company here is General Electric. Not only does the company make things that can be in high demand as the economy switches to a higher gear, but it also generates solid earnings. My feel is that the second quarter will pan out well too. (For more stock analysis, take a look at Energy Companies Hurt By Deepwater Moratorium)

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