Trade-Ideas: Honeywell International (HON) Is Today's "Roof Leaker" Stock - TheStreet

Trade-Ideas LLC identified

Honeywell International

(

HON

) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Honeywell International as such a stock due to the following factors:

  • HON has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $279.9 million.
  • HON has traded 1.1 million shares today.
  • HON is trading at 1.91 times the normal volume for the stock at this time of day.
  • HON crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in HON with the Ticky from Trade-Ideas. See the FREE profile for HON NOW at Trade-Ideas

More details on HON:

Honeywell International Inc. operates as a diversified technology and manufacturing company worldwide. The stock currently has a dividend yield of 2.2%. HON has a PE ratio of 19. Currently there are 14 analysts that rate Honeywell International a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Honeywell International has been 3.7 million shares per day over the past 30 days. Honeywell International has a market cap of $81.4 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 0.98 and a short float of 0.8% with 1.97 days to cover. Shares are up 4.7% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Honeywell International as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • HONEYWELL INTERNATIONAL INC has improved earnings per share by 8.8% in the most recent quarter compared to the same quarter a year ago. 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 company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Aerospace & Defense industry average. The net income increased by 8.3% when compared to the same quarter one year prior, going from $1,167.00 million to $1,264.00 million.
  • Net operating cash flow has increased to $1,666.00 million or 35.11% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 20.88%.
  • The current debt-to-equity ratio, 0.60, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.89 is somewhat weak and could be cause for future problems.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.