You may not realize you’ve used Honeywell International Inc. (NYSE:HON) products, but there’s a good chance you have. The diversified company doesn’t sell many retail products, but does offer a wide range of products found within other products. Its turbo chargers are probably in your vehicle and help reduce car emissions and make your car more efficient. Its flight landing systems have probably helped you fly home for the holidays.
In fact, Honeywell makes the airplane’s black box too.
Honeywell’s diversified portfolio covers a long list of industries: homes and building, aviation, defense and space, oil and gas, industrial, chemicals and vehicles. But that’s just the most general reason investors should take note.
HON Stock Worth a Look
The Fortune 100 company does tens of billions of dollars in sales each year and continues to grow through mergers, acquisitions and increased efficiency. Right now, shares of HON stock are a steal.
That’s especially true considering Honeywell has been honing in on the Internet of Things, laying the foundation for a digital enterprise transformation that’s almost sure to pay off. This was announced last year.
As the company put it:
”Honeywell’s newest business unit is now helping manufacturers harness the power of the Industrial Internet of Things (IIoT) to make their operations more reliable, more efficient and safer. Utilizing machine learning, big data, and automation technologies to create a system of systems that can accurately and consistently capture, analyze and transmit data, IIoT will lead to greater efficiency, sustainability and quality control across the entire supply chain.”
So far, things look good. Over the last year, shares of HON stock have gained 22%. Still, the stock is sporting a forward price-to-earnings ratio below 17, leaving it relatively reasonably priced when you consider the company’s earnings growth and sweet dividend.
In the company’s upcoming earnings report, 10% year-over-year expansion is expected. After that, the estimate is for 8% growth for the full year, with another 7% in store on top of that the year after. And there’s no cooling off in sight: earnings growth will average 8% for the next five years. Once again, that’s solid considering just how big and established Honeywell is.
Right now, Honeywell is yielding over 2.2% thanks to its 11% dividend CAGR since 2006, including a 15% increase in October of 2015.
With the aforementioned strong earnings growth — which you can expect from HON stock, as the company has met or exceeded Wall Street’s expectations in each of the last four quarters — income investors can expect another bump.
No wonder Honeywell is sporting a forward price target of $130, which would translate to upside north of 11%. If earnings do happen to fall short or if investors get impatient, I would snatch up shares in a heartbeat. HON stock offers steady income, steady growth and an impressive footprint. What’s not to like?
Hilary Kramer is the editor of GameChangers, Breakout Stocks Under $10, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.
