Is Honeywell Headed to $65 and Beyond?

Posted Mar 24th 2011 9:50AM by Joseph Lazzaro
Filed under: Honeywell Intl (HON), Stocks to Buy

Industrial conglomerate Honeywell International (HON) is a relatively low-profile company, but investors will take the capital gains just the same.

Honeywell's shares, which I first wrote about on February 26, 2009 at a price of $26.86, continue to vector higher, pushing $59 in March, before retreating to $56 recently.

And, needless to add, if you bought in at/near $27, now may be a good time to consider taking some profits with HON.

Others who can tolerate the risk can maintain their full position to go for a possible larger capital gain with HON.

Honeywell's revenue will likely increase 6-8% in 2011, after a similar gain in 2010, led by transportation system gains, and a good performance by its automation and control systems unit. (Honeywell makes those round thermostats you see in many homes.)

Further, Honeywell will likely benefit from increased corporate/consumer attention toward improving energy efficiency: the trend is global, and it's only just begun. Further, global airlines are likely to add planes/capacity -- another bullish factor for its cockpit and aviation controls business. HON will likely trade above $65 by the end of 2011.

The Thomson Reuters First Call FY2011/FY2012 EPS estimates for HON are $3.82 to $4.38.

Technically, Honeywell's chart is strong -- a staircase, with the stock only briefly dipping below the 50-day moving average. That's a sign that institutional investors are not waiting for significant pull-backs to add to shares of HON.

2011 Outlook: I view Honeywell as a long-term play, but if you're looking to sell HON within the year, it's probably best to take your profits after it rises to $62-64, if it fails to rise above $65.

Stock Analysis: I consider Honeywell International to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 50% position in HON now; I'd put a sell/stop loss at: $36.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: hon, honeywell