Honeywell International (HON)

For a couple of years, the talk has been about the Internet of Things and companies that benefit. Given that the US manufacturing economy is improving, but with very, very old equipment, there is money being spent to upgrade. This company builds instruments that measure things and are connected to the Internet. (See Top Picks.)

(A Top Pick Feb 8/17. Up 16.87%.) He likes that this is based on the connectivity aspect. Whether it is on the aerospace side or the industrial side, they want to use software to connect all the processes in machines and have them speak to each other.

This closed at $134.69, and is bang on its FMV of $134.45. He loves this one.

(A Top Pick June 14/16. Up 20%.) One of the leaders in connected devices in the industrial area. In the world of “Internet of Things”, they make sensors and connected devices. He continues to really like this space. Still a Buy.

He likes the industrials. This is one of the cyclical areas that should do well in an environment where there is reflation and global expansion. Pays a 1.89% yield. Should some of the Washington policies come through, this will continue to move upward. It is trading above the 50 day and the 200 day. A good chart.

(A Top Pick May 25/16. Up 18%.) In April and May and June 2016, a number of sectors turned up relative to the market. He went from sectors that were driven by monetary policy and low interest rate that were doing well, to sectors that were driven by earnings and economic growth. Industrials have been a key theme for him over the last year. Capital spending is picking up in the US. This company is part of the Internet of things.

From a research bottom-up, he is a fan of this company. What stands out is that they are reinventing themselves as an industrial tech company. They have even started a fund to invest in early stage technology companies.

This company has their fingers in a lot of different things. A very well-run company. One of the more interesting things they are involved in is being able to control everything in the home, and if they make it more user-friendly, it will catch on. You are probably on the right track with this.

It has been a great stock for quite a while, doing better and better. They had a very good earnings report recently, especially in the aerospace division. If we see higher defense spending in the US they will benefit.

(A Top Pick April 19/16. Up 9%.) He continues to like industrials. If he had to pick 4 themes, he would pick technology, industrial, financial and consumer discretionary. The US spent less last year on capital spending than in any year in 85 years, but it is picking up. With better small business optimism, there is money getting spent on capital spending, outside of the energy industry. This company is at the centre of the Internet of Things (loT) in creating connected devices and measurement devices in the manufacturing processes. It should continue to do well.

He likes it and it is a core holding. The only issue with industrials is that a large portion of sales comes from the US and there will be a foreign currency headwind. You may see earnings disappointments due to currency losses, but treat them as buying opportunities. He likes it for the long term.

An infrastructure play. This is about 1/3 the size of General Electric (GE-N), but is also a diversified industrial. They have taken a more technological progress of approach to being an industrial. Well positioned in the rising theme of software connectivity (connected aircrafts, autos, homes, etc.) Dividend yield of 2.22%. (Analysts’ price target is $131.66.)

This is a stock he follows. A big, well diversified industrial, that you could probably hold for a long time and not lose too much sleep. However, there are better opportunities. This is one you could buy, put away and forget about it. 2.2% dividend yield.

(Market Call Minute.) A great long-term play on technology and aerospace and automation, but fully valued. He would buy on a pullback.

A wonderful great company and a great theme. Value stocks have underperformed growth stocks in the US for about 8 years. If interest rates do not go up, value names are going to outperform growth names. Stocks like this are growthier companies, and even though they are wonderful strong stocks, they will basically be a source of cash when the big pension funds and big banks start to allocate money away from growth names. As long as you are okay in hiding out in this, it is still a wonderful long term hold. Dividend yield of 2.1% is not enough for him.