This Stock is a Little Honey in a Sour Market

Posted: Jan 08, 2012 9:01 PM

Honeywell (HON, $55.58) is a global aerospace and defense dynamo.  Honeywell had $33 billion in 2010 revenues, and is projecting 2012 revenues of $37.8 – $38.9 billion.  Wall Street projects earnings (EPS) to grow 11% in 2012 and 12% in 2013.

“We view HON’s emphasis on building environmental and combustion controls and its turbocharger products as benefiting from a strong global trend toward energy efficiency.  We see Aerospace benefiting from rising global fleet sizes, demand for better fuel economy, and aftermarket demand. We also expect specialty chemical volume to reflect global demand for petroleum products and overall global economic growth. At the same time, we view HON’s valuation as near historical averages on a variety of measures.” — Standard & Poor’s Research, Dec. 31, 2011

Standard & Poor’s maintains a 4-Star Buy rating and a $65 12-month price target on the stock.  S&P carries a risk assessment of “Medium” on Honeywell stock.  ”Our risk assessment reflects what we believe is HON’s above-average exposure to market movements, economic cycles, currency fluctuations and raw material costs, offset by our view of its strong balance sheet and its ability to generate significant amounts of cash.”

This large-cap value stock has been paying dividends since 1887 and currently yields 2.68%.  Institutions own 80% of Honeywell stock.

Honeywell stock had a big run-up earlier in the decade, traded between $54-$62 for a year leading into the 2008 Financial Meltdown, then crashed with the stock market.  The stock recovered back to that trading range in early 2011, then fell again with the August 2011 market drop.  Once again, the stock has recovered, recently trading $49-$55.

The next move looks upward and relatively immediate.  This is a great stock at the current price for growth & income investors who are experienced with stock market volatility.

A trader who buys at $53 and sells at $62 could make 17% profit.  Expect the stock to re-establish the $54-$62 trading range before commencing upward.

Also see:  5 Picks for 2012 in Aerospace, Defense –, Jan. 3, 2012 and  12 Energy Projects to Watch in 2012

Honeywell International Stock Chart

Honeywell International Stock Chart by YCharts

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