We're using Tuesday's market drubbing to buy more shares of a high-quality holding

Published Tue, Sep 13 202212:05 PM EDT

We're buying 50 shares of Honeywell International (HON) at roughly $188.29 each. Following Tuesday's trade, Jim Cramer's Charitable Trust will own 625 shares of HON, increasing its weighting to 4.06% from 3.75%. Markets were taking it on the chin Tuesday, with the S & P 500 giving back gains from the previous three sessions following a disappointingly hot August consumer price index. The report showed a month-over-month gain when expectations were for a slight decline. Economists had thought that the drop in energy prices would have impacted the overall number more. Although the market could certainly continue to move lower from here — and we probably won't be saved by an oversold condition any time soon with the S & P Oscillator no longer oversold at minus 2.43% — we are putting a little bit of cash to work Tuesday because we tend to view single-day market declines of this magnitude as opportunities to nibble on shares of high-quality companies. Why we like Honeywell. It's a profitable company with an excellent balance sheet and management regularly returns cash to shareholders via an increasing dividend payment and share repurchase program. These are the types of characteristics we look for when we know the Fed still has more tightening to do. Through the first half of 2022, Honeywell went through about $2.4 billion of the $4 billion it expects to repurchase this year. From an end market perspective, about 65% of the company's sales are focused on late cycle end markets like commercial aviation, defense, oil & gas, and nonresidential construction. We believe these end markets are less likely to have material earnings revision risks and better positioned to weather a softening macro environment. Aerospace is still in a post-Covid recovery mode with flight hours increasing and international travel picking up steam. Oil & gas is an industry that continues to see investment spending given elevated prices and the imbalance of supply and demand. And Honeywell's non-residential construction business, through its Honeywell Building Technologies segment, is a consistent grower as more and more places look to modernize to "healthy buildings." Honeywell's exposure to these end markets was one of the main reasons why it was named a top pick for 2023 in the Multi-Industry, Electrical Equipment & Machinery by analysts at Deutsche Bank last week. With this buy, we're repurchasing the full 25 shares we sold at around $198 in late-March plus an additional 25. In addition, we are upgrading our rating back to a 1 following the stock's 5% pullback since our March downgrade. (Jim Cramer's Charitable Trust is long HON. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

An aircraft engine is being tested at Honeywell Aerospace in Phoenix.

Alwyn Scott | Reuters