NEW YORK (TheStreet) -- Shares of Honeywell Int'l. (HON) - Get Report are up 1.64% to $104.71 in morning trading today as Goldman Sachs adds the stock to its "Conviction Buy" list with a $120 price target.

"We believe HON is the most compelling pick among the Multis given best-in-class execution, top quartile EBITDA/FCF growth and improving returns. In addition, HON has potential B/S firepower to drive more than $8 in EPS by 2017, implying a 13% CAGR for an $80 billion mega cap stock," analysts said.

This supports Goldman Sachs' view that HON will command a structurally higher multiple over time.

Four key points underpin their thesis: "pivoting organic growth, margin expansion slope should steepen, more aggressive B/S deployment, improving FCF/returns."

Insight from TheStreet's Research Team:

The Street's Jim Cramer recently interviewed Honeywell's CEO Dave Cote on the company's investor day.

Cote emphasized new software innovation happening at Honeywell and talked about the trend of meta-connection.

"I am really pumped up about everything that we have got coming. When I go back 13 years ago, we just had an empty pipeline. Now, every single business has great new products ... and a lot of it is software based," Cote said.

"We are going to see connected everything. So there's going to be connected homes, connected buildings, connected factories, connected planes, connected workers," Cote added.

Separately, TheStreet Ratings team rates HONEYWELL INTERNATIONAL INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate HONEYWELL INTERNATIONAL INC (HON) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
• The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash problems.
• HONEYWELL INTERNATIONAL INC reported flat earnings per share in the most recent quarter. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HONEYWELL INTERNATIONAL INC increased its bottom line by earning $5.33 versus $4.92 in the prior year. This year, the market expects an improvement in earnings ($6.10 versus $5.33).
• The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Aerospace & Defense industry and the overall market on the basis of return on equity, HONEYWELL INTERNATIONAL INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
• Net operating cash flow has slightly increased to $1,762.00 million or 5.63% when compared to the same quarter last year. Despite an increase in cash flow, HONEYWELL INTERNATIONAL INC's cash flow growth rate is still lower than the industry average growth rate of 20.71%.
• You can view the full analysis from the report here: HON Ratings Report

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