We recently published a list of Jim Cramer’s Latest Mad Money Episode: Top 10 Stocks to Watch. In this article, we are going to take a look at where Honeywell International Inc. (NASDAQ:HON) stands against other stocks on Jim Cramer’s top stocks to watch list.
Jim Cramer in a latest program on CNBC made the case for investing in individual stocks to enjoy bigger gains when compared to investing in just the broader market index funds. Cramer said that while it’s “easy” to just park your money in index funds and let the market do the work, investing in individual stocks can give you some “serious gains.”
“I think you should own more than just an index fund because buying individual stocks with special characteristics is how you can rack up some really serious gains. That includes often scoring speculative stocks. Far too often, we become snobs when we talk stocks. So many experts think that if you venture past the index, you could fall off some sort of intellectual cliff that makes any gains null and void. It’s as if the huge swath of points you could have gained simply don’t count. But that, people, is nonsense.”
Cramer said banks do not “care” where the money comes from and neither should investors. He urged investors to not always avoid speculation.
“I come tonight to praise speculation. Here, I’m the only one on TV who actually does this, believe it or not, and to show you how well you could have done if you picked some high flyers for your portfolio and simply held them for the long ride, along with your prosaic, precious index funds.”
READ ALSO: Jim Cramer’s Latest Lightning Round: 11 Stocks to Watch and Jim Cramer on AMD and Other Stocks.
For this article we watched the latest programs of Jim Cramer aired on CNBC and picked 10 stocks he’s talking about. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Investors: 50
Jim Cramer in a latest program on CNBC “welcomed” Elliott Management’s activism around Honeywell International Inc (NASDAQ:HON), saying a potential break-up of the conglomerate would bode well for the business.
“If Honeywell breaks itself up into an aerospace play and an automation play, you’ll get a simplified two-company solution that will make the resulting business much easier to manage. I think that’s undeniable. Plus, as Elliot points out, this market thirsts for pure-play aerospace companies, and Honeywell fits the bill perfectly. Their aerospace division dominates the cockpit for both Boeing and Airbus. That’s why I welcome Elliot’s intervention.”
Cramer said he’s been selling Honeywell International Inc (NASDAQ:HON) shares for his charitable trust but after Elliott’s move, he intends to keep the rest of his stake.
“We pretty much gave up on Honeywell because of its endless missteps and excuses. At our club meeting on Thursday, we intended to talk about why we were dumping the stock after a long period of frustration. But now, Elliot’s come along with a great plan that allows for better execution. With the smartest activist hedge fund willing to get his hands dirty, we’re going to keep the rest of our Honeywell position, betting that Elliot will be able to unlock value here. Suddenly, this poorly run company has a potentially immense source of upside.”
Cramer explained the reasons why he was investing in the stock in the first place:
“Not that long ago, Honeywell decided to spin off its legacy chemicals business and focus on the company’s three megatrends: aerospace, automation, and the energy transition. I applauded that move because it simplified the group of disparate businesses. At the same time, the company told us earnings would come in at the high end of their forecast, and that’s why we told CNBC Investing Club members that we were encouraged by the tone of their comments. But we were wrong.”
Overall, HON ranks 5th on our list of Jim Cramer’s top stocks to watch. While we acknowledge the potential of HON, our conviction lies in the belief that under-the-radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HON but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.