Time to Buy Honeywell?
More and more companies are laying out five-year plans, Cramer said Monday. When a company with a top-notch management team has a clearly laid out, long-term plan, Cramer called it the makings of a terrific investment.
So the “Mad Money” host is dedicating time this week to comb through those plans to find the names he thinks are the most bankable.
First on his list is Honeywell International, a manufacturer that makes everything from aerospace components to auto parts.
The Morristown, N.J.-based company released its five-year plan in March of 2010. It projected six to eight percent annual revenue growth through 2014 and aimed to boost margins by 60 basis points a year. A year later, the company reported its annual revenue growth was running at seven to nine percent, and it has raised its margin forecast to 75 basis points.
Honeywell is also working to reduce cycle times for new product development by up to 30 percent and to cut new product development costs by up to 50 percent. It also plans on growing their emerging market exposure from 23 percent of revenues in 2010 to 30 percent in 2014, excluding aerospace and defense. Additionally, the company intends to more than double its new product sales.
It’s a plan Cramer thinks Honeywell can deliver on.
“Even though Honeywell is what’s known as a cyclical business, meaning it’s a smokestack industrial company that does better when economies around the world are accelerating and of course, therefore, does worse when they’re slowing,” he said, “it also has a lot of exposure to what we call secular growth themes... that's something that works regardless of the health of the global economy.”
Cramer always likes companies that are about energy efficiency and Honeywell is a leader in making energy efficient heating ventilation and air conditioning systems, he said. The company also makes fuel-efficient turbochargers for cars and trucks, as well as avionics that improve aircraft fuel efficiency.
What’s more, the company is also levered to the aerospace cycle that has just gotten started.
“Bull markets in aerospace usually last for about seven years,” Cramer noted. “They’ve [also] got exposure to the bull market in trucks.”
Honeywell is scheduled to report earnings before the opening bell on July 22.
A previous version of this story misstated when Honeywell is scheduled to report its quarterly earnings results.
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