Will Honeywell Cool Off in 2013?

As 2013 begins, now's a good time to look at the future prospects for the stocks you own. If you don't know where a company's headed in the next year and beyond, then it's impossible to make an informed decision about whether you should add the stock to your portfolio -- or sell it if you already own it.

Today, I'll look at Honeywell (NYSE: HON  ) . The components manufacturer had a hot 2012 as it managed to focus its energies on pockets of strength even in an economy that has struggled overall. Will that strategy work this year as well? Read on to learn more about Honeywell's prospects for 2013.

Stats on Honeywell

Average Stock Target Price

$71.10

Full-Year 2012 EPS Estimate

$4.48

Full-Year 2013 EPS Estimate

$4.92

Full-Year 2012 Sales Growth Estimate

2.9%

Full-Year 2013 Sales Growth Estimate

4.6%

Forward P/E

13.5

Source: Yahoo! Finance.

Will Honeywell heat up in 2013?
Analysts have modest expectations for Honeywell this year, but if they're correct, then investors could see modest gains of around 8% on the stock. Even better, earnings are seen rising by almost 10% in 2013, which would open the door to a more attractive multiple even if Honeywell only meets expectations.

The biggest difficulty that Honeywell is having to deal with right now comes from all the uncertainty around Boeing (NYSE: BA  ) . Between multiple problems with its 787 Dreamliner and an ongoing labor dispute with its engineers' union, Boeing hasn't inspired confidence lately that it's operationally up to the task of handling its huge backlog. With Honeywell joining General Electric (NYSE: GE  ) , Spirit AeroSystems (NYSE: SPR  ) , and a host of other suppliers for Boeing aircraft that are counting on success from the aircraft manufacturer, the specter of an FAA review of the Dreamliner and the attendant nervousness will keep a lid on enthusiasm for the sector at least in the near term.

To overcome that challenge, Honeywell has to build other sources of revenue. Its deal with Textron (NYSE: TXT  ) to provide components for Cessna aircraft is a step in the right direction, and ideally, Honeywell will be able to add more aircraft manufacturers to its list of clients.

One promising area comes from the trend toward integrating smartphone technology with remote control devices. Honeywell has several products that are linked to smartphone apps, allowing remote security monitoring as well as allowing adjustments to heating and cooling systems, and it continues to work on further advances to take advantage of wireless technology.

Honeywell has plenty of potential in 2013. If it can successfully keep its client base as broad as possible, Honeywell is well poised to prosper from a favorable environment in the aerospace industry as well as its other businesses.

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