This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

All's Well with Honeywell

With earnings season in full bloom and HON approaching the earnings confessional let's watch and see what happens. The dividend yield on HON is currently 2%. That doesn't make "buying-and-holding" a compelling theme, especially when the 10-year Treasury yield is 2.62% state-tax-free.

Another concern worth mentioning is that both HON and BA are selling at rich multiples to earnings. The current PE ratio for both is above 20 and the forward (1-year) is close to 15 times earnings.

Analysts are not anticipating HON to shoot out the lights when it reports second-quarter EPS and revenue numbers. The consensus estimate for EPS is 6%, and less than 3% for sales growth and revenue.

HON hasn't had a good, old-fashioned correction since November 2012, when shares temporarily fell 8.5%. Since then the average pullback has been less than 5%.

Past performance is no guarantee of what may lay ahead. Yet it can indicate the kind of correction a stock is capable of experiencing.

So ask yourself, would you rather own HON at $82 or at $75? If you could buy shares at $75, you'd be giving yourself a price dividend of 8.5%, plus the dividend yield-to-price would be nearly 2.2%.

Those who are sitting on a nice profit in HON stock may want to consider taking half off the table with that very consideration in mind. HON shares are up about 30% since the beginning of 2013.

At the very least if you have a nice profit on HON or BA, consider using a stealth trailing stop loss to protect your gains.

At the time of publication the author is neither long nor short shares of any stock mentioned in this article.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

3 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,113.54 +61.81 0.36%
S&P 500 1,983.53 +9.90 0.50%
NASDAQ 4,456.0160 +31.3120 0.71%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs