Tyco shareholders received an unwelcome sur-prise in late 1999, when the Securities and Exchange Commission launched an informal inquiry into the acquisitive company's accounting. But the SEC dropped the case last July. Tyco is a kind of mini General Electric, only cheaper. Through its acquisitions of AMP and Raychem, it's the world's largest producer of electrical and electronic components, such as connectors and relays. And it's a major player in medical devices.
Health care is extremely stable, and electronics is showing tremendous internal growth.
In Tyco's latest earnings release, CEO Dennis Kozlowski gave a remarkably upbeat assessment. With slower economic growth, and assuming no major conflagrations in the Middle East, our guess is that the next leg for oil prices is down. Truth be told, because of a savvy fuel-price hedging program, Southwest won't benefit from lower costs as much as other airlines. Meanwhile, Southwest is benefiting from the operational problems at many other airlines. And by holding down fare prices while others have been boosting them substantially, it may also be capturing business customers from the competition.