Shares of Honeywell International Inc. (HON) hit a 52-week high of $95.21 during the trading session on Feb 28. However, the stock closed the session a notch lower at $94.44, which translated into a solid yearly return of 35.5%. The average trading volume aggregated 2.9 million shares.
Despite its strong price appreciation, this Zacks Rank #3 (Hold) stock still has enough fundamentals that may further drive it upward. The stock is currently trading at a forward P/E of 17.1x.
Honeywell reported fourth quarter 2013 net income of $947 million or $1.19 per share versus $251 million or 32 cents per share in the year-ago quarter. The improvement in earnings was driven by an increase in sales across its businesses.
Honeywell’s diversified business portfolio has the potential to earn consistent above-average returns and mitigate operating risks. The company’s diligent focus on working capital management, free cash flow generation and a conservative balance sheet remain key positive attributes for the stock to perform well in the long term.
The operational improvements coupled with strong productivity and lucrative investments are all expected to contribute to future margin expansion. Honeywell also continues to benefit from investments in new products and services.
We are encouraged by management’s continued efforts to launch products and technologies in order to drive organic growth while expanding its business in new geographical regions.
Over the last 30 days, Honeywell’s earnings estimates for 2014 and 2015 climbed higher on expectations of solid earnings momentum. We also envision an uptrend for the stock on the back of its strong growth potential.
Other stocks to Consider
Honeywell currently has a Zacks Rank #3 (Hold). Stocks that look promising at current levels include Marubeni Corporation (MARUY), Mitsubishi Corporation (MSBHY) and 3M Company (MMM), each carrying a Zacks Rank #2 (Buy).