We are buying 50 shares of Honeywell at roughly $224.67. Following the trade, Jim Cramer’s Charitable Trust will own 440 shares of HON, increasing its weighting in the portfolio to 2.5% from 2.22%. We’re picking up shares of Honeywell ahead of next week’s spin off of its Aerospace business, which will be known as Honeywell Aerospace and trade on its own.We’re buying back the 30 Honeywell shares we sold in late May at a higher price of $231, plus a little extra to get bigger into the breakup. As we wrote two weeks ago when we upgraded our Honeywell rating back to a buy-equivalent 1, we find the company’s valuation quite attractive ahead of the upcoming separation, with the stock not getting enough credit for its higher-multiple Aerospace division. The remaining Honeywell Technologies division is a “show me” story, but we thought the upbeat investor day targets of 4% to 6% organic sales growth — paired with steady annual margin expansion and double-digit annual adjusted EPS growth — creates an investment case for a re-rating, a term for the stock eventually fetching a higher price-to-earnings multiple. We also see Honeywell as one of the key beneficiaries in the portfolio of a Middle East peace deal. Catalyst shipment sales from its Process Automation & Technology unit have been pushed out due to the conflict, so we expect the company to recapture those revenues (this business will stay with the remaining Honeywell Technologies). Also, we expect oil-and-gas operators to look to Honeywell to repair and upgrade liquified natural gas (LNG) equipment damaged by the war, creating a nice opportunity for Honeywell Technologies. In Aerospace, the division has been hurt by the jet fuel supply crunch and the risk of airlines canceling flights. Lower oil prices could encourage airlines to add capacity in the quarters ahead. (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.
