All Signals Go At Collins

By Gene G. Marcial

An Abrupt Liftoff
Techs aren't flying off the charts, but Rockwell Collins (COL ) is, hitting a new high of 35, up from 29 in May. Spun off in 2001 by Rockwell International, Collins is a world leader in high-tech aviation electronics and communications. "The aerospace market is on the way to a global recovery, and defense spending is apt to stay robust -- a big plus for Collins," says Marion Schultheis of investment firm J. & W. Seligman, which owns shares. Among big Collins investors: Barclays Bank (BCS ), T. Rowe Price, and Warren Buffett's Berkshire Hathaway (BRK ).

Defense accounted for 50% of Collins' sales in 2003, and commercial 50%. Schultheis says rising demand for business jets and larger aircraft is boosting commercial sales. She notes that Collins has been selected for a group led by General Dynamics (GD ) to develop small, lightweight, software-oriented radios for all branches of the U.S. military. Cai von Rumohr of investment firm SG Cowen sees Collins earning $1.66 a share in 2004 ending Sept. 30, and $1.93 in 2005 -- both above consensus estimates. Some "wild cards" not reflected in his numbers, says von Rumohr, are the improving demand for widebody aircraft in Asia and a possible recovery in the ailing U.S. airlines.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

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