#6 - Honeywell (NASDAQ:HON)
Honeywell (NYSE:HON) is finding many of its traditional business units under pressure. However, the company is on the front line of the American effort to delivery N95 face masks. The company was listed as one of three companies to receive a portion of $133 million from the United States as part of the Defense Production Act (DPA).
Honeywell is using some of the spare capacity from its Phoenix Engines campus in Arizona.
Honeywell faces a challenging environment because it is reliant on commercial aviation which is shut down and will be for the foreseeable future. HON stock is down over 25% for the year, which is better than the 40% decline in aerospace supplier stocks for 2020. Honeywell’s own internal estimates is suggesting the aerospace sector will fall 25% on a year-over-year basis.
The company may get a slight boost as office buildings open up, but with airports and colleges remaining shut down, it’s hard to see that as being much of a bump. But value investors can point to the company’s positive cash flow and the dividend as reasons to own the stock.
About Honeywell International
Honeywell International Inc engages in the aerospace technologies, building automation, energy and sustainable solutions, and industrial automation businesses in the United States, Europe, and internationally. The company's Aerospace segment offers auxiliary power units, propulsion engines, integrated avionics, environmental control and electric power systems, engine controls, flight safety, communications, navigation hardware, data and software applications, radar and surveillance systems, aircraft lighting, advanced systems and instruments, satellite and space components, and aircraft wheels and brakes; spare parts; repair, overhaul, and maintenance services; and thermal systems, as well as wireless connectivity services.
Read More - Current Price
- $225.79
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 9 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $241.45 (6.9% Upside)
The novel coronavirus that has spawned the Covid-19 pandemic is highlighting the importance of our nation’s healthcare workers. It also highlights the need for these workers to have proper protective equipment.
If you’re an investor that’s reading this presentation, you may be concerned that this may be a one-time event. But when events like these happen, the economy that emerges on the other side is always a little different. There will be much more emphasis placed on PPE in future years.
Market Industry Reports (MIR) recently released a report that cites the Global Medical Protective Clothing Market may grow at a CAGR of approximately 6% in the next 10 years.
And a U.S. Conference of Mayors survey found that 88% of respondents said their safety and medical personnel lacked an adequate supply of personal protective equipment.
And that means that some of these companies may find that there’s money to be made in continuing allowing some manufacturing capacity to keep the pipeline stocked.
The stocks in this presentation contain a substantial amount of risk. And investors may need hold these stocks for several years before they see a substantial benefit. Nevertheless, with a vaccine at least six to nine months away and no FDA-approved treatments currently in the pipeline, we will be sadly dealing with the novel coronavirus for some time. And that means that these stocks may still have some additional revenue to come from manufacturing personal protective equipment.
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