It could be a "guilty by association" penalty on them because of their inclusion in industrial ETF's like the XLI. The likes of GE, CAT, BA, and UTX are suppressing the performance of those ETF's which thus brings downward pressure on HON. They can escape this, of course, with heavy buying of HON stock by institutions. This is currently unlikely due to the stretched technical indicators showing the stock to be overbought.
Several factors running here. Brent/WTI spread cutting into US refineries-- will they still run at high utilization rate thus increasing their demand for UOP catalysts and services. Will aerospace keep humming along moving forward allowing for HON to maintain and grow sales in that segment?
Some variables and questions out there that could be removing some bulls from the stock. Otherwise, buy JAN '16 calls and sit back and watch over the next 18 months.
Currently 5.7% under their all time high. Not exactly the worst place to perhaps quicken some buy backs. They are trading at a low forward multiple so I'm not sure how much more downside they have versus touching their 200 moving averages in the $88 range. Even their 365 day average is roughly $80. $80's would be better than $90's for buybacks, but that is presuming it will trade low into that range. I would begin buying them back now and use at least 50% of the year allotment for buybacks in the upper $80's. If it falls lower, they can use the other half, otherwise, they would dollar cost average down their overall buys for the year.
I doubt we go too far under $60, if we breach at all. Low $60s for the moving averages is quite within reach. Not sure we test the $50's moving average though. Possible, but not probable---- yet. Would need some bad news about earnings or demand or a huge number of new pipeline announcements to drive it that much lower.
My primary concern going forward (multi-year horizon) is how well the company will fare after the eventual retirement of Cote. He transformed the company after the failed GE merger, turning HON into a compounding marvel. I just hope there is enough similar talent and mindset throughout the rest of the chain of command to keep this going for next few decades (I want to retire with HON stock-- currently closing on 28).
Yep, got a turbo on mine. Not sure if mine is from Honeywell or BorgWarner though- quite possibly Borg since they supply a lot of components for VW diesel's (what helps us get 50+mph highway without too much trouble).
Honeywell has some core products that weather global economy turbulence pretty well. Refining and petrochemicals, turbochargers, simplification/automation systems. All of these will benefit with minimal global GDP expansion and notably in the face of inflation and population growth. The latter will put upward pressure on input costs, pushing businesses to look for solutions that will help mitigate operating expenses. That is where Honeywell steps in, providing cost reduction solutions and products/technology that increase performance and efficiency.
Their taxi system for jets is a new case along these lines. Airlines not only have money to spend at the moment but are looking for ways to further reduce fuel expenses. Whether that comes through newer engines and aero designs, or from these new taxi solutions, they will benefit.
Add the 50 moving averages. The link won't post if I include them. The 50 day is right above $1.80. Not nonesense. Tech analysis.
I have a long position back on as well. Started back in for my spec position. Things are moving in the right direction for the company, but the stock got way ahead of itself. I love seeing +10% days but if it isn't warranted, it is only borrowing from the future of the stock.
Trade the moves and benefit from the froth when possible. Mr. Market gave everyone a great deal at $2.60 to get out, and a better deal at $2 and below (now) to start moving back into the name.
To loosely paraphrase P Diddy, "It's all about the Bollingers, baby".. Upper Bollinger got hit too many times and the stock rolled over to the Lower level. The RSI, W%R, and MACD all followed. Now the stock has technicals beginning to bottom out and we get a bounce today. With any luck, the bounce will hold. Looking over the landscape of industrial companies, the majority are at or near 52 week highs. They started to collapse with fears over Russian business getting removed and the weakness in China. CAT is up because they were the dog of the group for so long.
HON and GE are the among the first, yet again, to reach the bottom of the technical swing. I would expect this to trade fairly sideways with perhaps another 3% or so down before bottoming and moving higher. They are increasing business opportunities in China and the US and are putting a nice tailwind behind the fundamentals as per recent comments on M&A/Dividend/Buyback spending over the next 5 years.
If this is getting dragged down by the Nasdaq then $1.80 range could very likely be within range. Most of the Nasdaq names are selling off through various levels of moving average support. The Nasdaq proper looks like it is heading to the 50 moving average. If CPST follows suit to a moving average then roughly $1.80 is the first target.
It would certainly take out a great deal of froth in the stock. After all, until we see an official positive EPS, we cannot put a P/E onto this name. That is a strength that remains in the hands of the shorts to use against this stock. We must have positive EPS within the next 6 months to get the shorts off of this name for a while.
When I say that the company has cut guidance twice, I am referring to their early announcements that Q4 and now Q1 would come up light versus previous expectations. What is to say that won't continue for Q2 and Q3, putting increased pressure on Q4 to make up the difference.
It could very well be a stop along the way to $105 if we move to test the range around the 200 averages. The 100's are just shy of $112. Currently, the Williams %R is oversold, and the RSI is oversold. The MACD, however, has only just crossed below the trend line. On previous sell offs, when the lines cross they usually continue downward until the move bottoms around a moving average. I would venture that if we do not get a significant move higher that also pulls the MACD back to projecting upward trajection, we could very easily continue down to the lower averages.
The fundamentals would support a case for a lower price as well. UTX came out and reaffirmed 2014 guidance, with an expected hit to Q1. Now, based on the short-term guidance for 2014, we are looking at somewhere between 5-6% EPS growth off of 2013. You have a stock trading at roughly 17-18x earnings with 5-6% short-term growth that has now TWICE cut guidance. I do not see a justification for that high of a multiple until the company proves that this is a minor hiccup as global economics are shifting due to China demand (where UTX has huge business opportunities for Otis and Carrier, etc.). If 2014 guidance holds, and we trade down to the $105 level, you have a stock trading at roughly 16x (105 divided by the 6.55 low end estimate for the year). I am more comfortable with 16 and below than I am with 17-18x. A P/E of 16 takes out great deal of premium for perfect execution. When compared to other industrial names operating in similar fields (Honeywell), UTX does not have growth high enough to support a premium multiple AT THIS TIME. If, however, management gets ahead of these headwinds and is able to boost sales, and thus the bottom line, and build future growth expectations, then a return to 17-18 would be not only justifiable but warranted.
Keep your core position. Trade around that with options to raise capital to buy more stock on the deep dips. Solid company, but the stock is high.
Let's see... buy 2250 shares at 1.56, then sell at 2.20.... back out the $10 for transaction cost... and you get... hmmm.... 40%!
I can do math quite well.
Will redeploy after the gaps are closed and make that same money over a second time while your sitting on your hands watching the red and green bounce around on your screen.
Okay, so I guess I'm bashing... I guess that's why I sold 2250 of my shares today for a 40% gain.. Hmm... I'll go "think about what I've done".