With the market looking increasingly expensive, it's time to create watch lists of stocks to pick up if the market dips in 2022. In that vein, I think Honeywell International (HON), United Parcel Service (UPS -0.12%), and Johnson Controls (JCI -1.00%) are well worth keeping an eye on. They are all excellently run businesses with strong long-term growth prospects.

Honeywell International

Despite raising full-year sales, earnings, and free cash flow guidance from the start of the year to the third-quarter earnings release at the end of October, Honeywell stock lost 2% in 2021. The reason for the decline comes down to two things. First, the deteriorating full-year outlook in the key aerospace segment is leading investors to believe the company's overall growth prospects are weakening going into 2022.

An airplane taking off.

Image source: Getty Images.

Second, Honeywell started 2021 trading at a premium valuation, and despite the decline, it still ended 2021 commanding a premium valuation. Simply put, the market already knows that Honeywell is an excellently run company with a collection of businesses that can generate growth through all but the most extreme of business conditions. As you can see below, Honeywell is higher rated than most of its large-cap aviation, automation, and building controls peers.

The valuation method used below is enterprise value (market cap plus net debt) to earnings before interest, taxation, depreciation, and amortization, or EBITDA.

HON EV to EBITDA (Forward) Chart

Data by YCharts

Looking ahead, Honeywell's aerospace segment will grow over the long term even if the pace of the recovery is uneven due to the pandemic. Meanwhile, its building controls segment will grow as digitization creates a new generation of smart-building owners looking to optimize building performance and create healthier, cleaner buildings.

Honeywell's warehouse automation business services the high-growth e-commerce warehouse market and its productivity solutions (barcode scanners, mobile computers, etc.) are an essential part of corporate efforts to improve logistics and retail operations. Finally, the company's process automation and refining catalysts and absorbents will benefit from higher energy prices and the reopening of the economy.

UPS

UPS looks like the best value of all the three stocks here and is worth buying even without a pullback. There are three reasons for this view. First, there's evidence that UPS is winning the war of managing to expand its U.S. domestic package margin in the face of cost pressures coming from growth in business-to-consumer (B2C) e-commerce deliveries. For reference, B2C deliveries often involve inefficiently packaged or bulky items that are costly to deliver residential addresses.

Second, management's transformational strategy of focusing on healthcare and small and medium-sized businesses (SMB) is paying off in the pandemic. The importance of the former has been highlighted by the pandemic, and the latter has accelerated e-commerce plans in response to social isolation measures.

Packages on a conveyor belt.

Image source: Getty Images.

Third, UPS looks like it's tracking ahead of its 2023 targets, and there's reason to believe they could be raised. For example, the current 2023 targets are built around adjusted operating profit margin expansion in the U.S. domestic package segment from 7.7% in 2020 to between 10.5% and 12% in 2023. However, CFO Brian Newman told investors he expected the segment's margin would already be at 10.5% in 2021.

As such, UPS is well on its way to achieving its 2023 aims, and don't be surprised if management elects to nudge the targets higher on the next earnings call.

Johnson Controls

Investors looking for a stock benefiting from the corporate push to eliminate greenhouse emissions and reach carbon neutrality need look no further than Johnson Controls.

The building controls and heating, ventilation, and air conditioning (HVAC) company is a leading player in helping companies ensure their buildings are healthy, clean, efficient, and sustainable -- a key aspect of ESG (or environmental, social, and governance) investing. Given that 40% of global carbon dioxide emissions come from the building sector, the importance of the sector on climate control is pivotal.

Several graphs superimposed over a city skyline.

Image source: Getty Images.

In addition to the need to retrofit buildings in order to meet environmental goals, Johnson Controls has a growth opportunity coming from the increased adoption of digital technologies in buildings. Through the application of web-enabled devices and advanced analytics, building owners can create smart connected buildings, and in doing so make them more efficient and sustainable.

Management sees revenue growing at an annual rate of 6% to 7% over the medium term with strong margin expansion in tow. It's an attractive proposition, but thanks to a great 2021 the stock is looking no more than a reasonable value. A dip in the share price would make it a more attractive buy.