We’re closer to upgrading Honeywell as shares pull back into breakup
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. The market is attempting to rebound from Friday’s sharp sell-off, with the S & P 500 up 0.6% and the Nasdaq rising 1.2% in afternoon trading. The AI trade was mostly higher, but hyperscalers remained under pressure as investors worried that more may follow Alphabet ‘s lead and tap the equity markets to fund AI spending. Honeywell shares are drifting lower after the company reaffirmed its full-year outlook and provided new guidance for Honeywell Technologies, the name of the remaining company following the separation of its aerospace business. Some of the key updates from the presentation: The company saw strong orders in the second quarter Industrial automation growth is expected to be roughly flat this year, an improvement over management’s prior view of a low-single-digit decline. Process automation and technology (PA & T) remains a second-half-of-the-year story due to the ongoing conflict in the Middle East, impacting shipments and delaying upgrades. Honeywell also cleaned up its EPS guidance by excluding the aerospace business, removing the impact of recently public Quantinuum, and accounting for pension and separation-related costs. Investors will get a more in-depth look into Technologies, including new three-year financial targets, at its investor day on Thursday. Honeywell announced on Friday that shareholders will receive one share of Honeywell Aerospace (HONA) for every two shares of Honeywell common stock. Using the Charitable Trust as an example, the portfolio will receive 195 shares of the Aerospace company. Immediately after the spin is complete, Honeywell Technologies will undergo a 1-for-2 reverse stock split, reducing our share count from 390 to 195. Lots of moving parts, but the market value of our pre-spin-off Honeywell position shouldn’t materially change when you add up the new Honeywell Aerospace and Honeywell Technologies stakes. We opportunistically trimmed our Honeywell position two weeks ago at around $232 per share. Following an 8% pullback ahead of the company’s breakup, we are getting close to buying back those shares and upgrading our rating to a 1. We have long believed that industrial breakups can create value for shareholders. Although every situation is different, successes at Qnity Electronics , Solstice , and most recently FedEx Freight support that view. We’re monitoring all of Apple’s new announcements from its Worldwide Developers Conference . The highly anticipated revamped “Siri AI” was revealed shortly after 1:30 p.m. ET, and Apple shares fell to roughly $308 from an event high of $317. We’ll know more on Tuesday when the full reviews are out, and tech analysts opine on the event. But this reaction is likely more of a sell-the-news type than one based on something gone wrong. Anticipation for a next-generation Siri has been growing since at least January, when Apple and Google announced a multiyear collaboration that included integrating Google’s Gemini into Apple’s foundation model strategy. Vail Resorts delivers quarterly results after the closing bell, while JM Smucker reports before the bell on Tuesday. May existing home sales are also reported in the morning. The most important economic data report this week is the May consumer price index report , released on Wednesday. Coming off last Friday’s strong jobs report, the market is increasingly concerned that the next move in interest rates could be a hike rather than a cut later this year. While the Iran war has created near-term inflation pressures, the longer it drags on, the greater the risk that higher prices become embedded in the broader economy. A hotter-than-expected CPI report would make the hawks’ call for rate hikes grow louder, further complicating the near-term outlook for stocks. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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.