Stock of the Week: Honeywell

Honeywell has overtaken General Electric and our analysts rate the industrial conglomerate highly

James Gard 15 October, 2021 | 10:51AM
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Stock of the week post-it

Each week we ask our Twitter followers to pick a stock for us to write about. This week’s theme has been US companies that are reporting results in the coming weeks, and there are plenty of these as Q3 earnings seasons cranks up. But instead of going for this biggest names, we’ve gone for the less obvious companies. Our Twitter followers have gone for conglomerate Honeywell (HON), a North Carolina based company that makes a range of products for domestic and industrial uses and has a long history. These includue home thermostats, cockpit instrumentation for planes and lighting and heating controls for buildings.

One of our other Twitter choices this week was General Electric (GE), which during the imperial Jack Welch era bought Honeywell for more than $20 billion in 2000 before EU competition authorities intervened. As things often turn out, Honeywell is now much bigger than General Electric, with a market cap of $150 billion versus GE’s $112 billion. Morningstar analysts rate Honeywell highly, awarding the company a wide economic moat. Joshua Aguilar says: “Honeywell is one of the strongest multi-industry firms in operation today, which we think the market rightly recognises by awarding the firm a conglomerate premium. We predicate our thesis mostly on: a) the commercial aerospace recovery; b) continued strength in defence; and c) an increasingly automated world in mission critical end-markets like warehousing, utilities, and oil and gas.”

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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James Gard  is content editor for Morningstar.co.uk