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Honeywell Is One to Watch Amid Transition

Honeywell Is One to Watch Amid Transition

Barbara Noverini: We think that an interesting transition is happening at wide-moat Honeywell currently, which makes this stock one to watch.

In February, new CEO Darius Adamczyk succeeded longtime CEO Dave Cote, who was widely credited with driving profitability improvement throughout Honeywell's portfolio. Margin expansion has indeed been impressive, and we believe that Honeywell has now earned its right to grow.

Adamczyk's vision for the company includes greater emphasis on innovation, which we believe could translate into higher levels of sales and earnings growth as Honeywell focuses on marrying software and services with industrial equipment. Examples of this include connected aircraft, which can monitor the real-time performance of an auxiliary power unit while at the same time providing reliable high-speed internet access to airline passengers. In addition, we see great potential in connected home and building offerings, made possible through smart metering technologies. Intelligent warehouse automation is also on the horizon, with Honeywell's recent acquisitions of Intelligrated and Movilizer.

We're starting to see more examples of high margin incremental revenue growth opportunities like these emerge from Honeywell's portfolio, which we believe will benefit patient, longer-term investors.

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About the Author

Barbara Noverini

Senior Equity Analyst

Barbara Noverini is a senior equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She covers diversified industrials and waste-management providers.

Before joining Morningstar in 2011, Noverini was a research analyst for DeMatteo Monness, a boutique broker/dealer, for five years. From 2001 to 2006, she was a researcher in litigation services for Round Table Group, which is now a part of Thomson Reuters. She began her career as a quality assurance analyst for Hewitt Associates.

Noverini holds a bachelor’s degree in psychology from Northwestern University and a master’s degree in public health informatics from the University of Illinois at Chicago. She also holds the Chartered Financial Analyst® designation.

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