Cramer buys Intel and Honeywell Aerospace after sharp pullbacks
Jim Cramer’s Charitable Trust plans to add HONA and INTC as lower oil prices and chip weakness create a fresh buying window.
By Maya Okafor · Markets Writer
· 3 min read
Cramer buys Intel and Honeywell Aerospace on Monday, according to CNBC’s Investing Club, adding to two positions that have been under pressure for different reasons. For everyday investors, the move is a read on two market pressure points: oil prices for aerospace and capital spending concerns for chips.
CNBC’s Investing Club said Jim Cramer’s Charitable Trust planned to buy 50 shares of Honeywell Aerospace at about $204.07 and 100 shares of Intel at about $93.84 shortly after the opening bell.
After the trades, the Trust would hold 320 shares of Honeywell Aerospace, ticker HONA, lifting the position’s portfolio weighting to 1.7% from 1.4%. The Intel position would rise to 1,200 shares, with its weighting increasing to 2.85% from 2.6%, according to the Club.
Why is Cramer buying Intel and Honeywell?
CNBC’s Investing Club tied the buying decision partly to a market rebound after a temporary pause in hostilities between the U.S. and Iran pushed oil prices lower. The Club also said stock futures were solidly higher.
Lower oil can matter for aerospace stocks because fuel is a major cost for airlines. CNBC’s Investing Club said the broader aerospace trade had been pressured as higher oil prices raised concern that airlines could cut flights to offset fuel expenses.
Honeywell Aerospace has struggled since it was separated from former parent Honeywell Technologies late last month, according to the Club. HONA shares have dropped from about $220 on June 29 to the low $200s.
The Club said Wall Street’s reaction to HONA has been mixed, with more hold ratings than buy ratings. Still, it argued the stock’s valuation looks too low relative to RTX, the parent of Pratt & Whitney and Collins Aerospace.
According to FactSet figures cited by CNBC’s Investing Club, Honeywell Aerospace trades at about 24 times estimated 2027 earnings per share, while RTX trades at 27 times earnings. A price-to-earnings multiple compares a company’s stock price with its expected profit per share, giving investors one way to judge how expensive a stock looks versus peers.
The Club also pointed to Honeywell Aerospace’s status as a standalone company, saying execution should improve over time. It cited management’s 2030 targets, including a 6% to 8% organic sales compound annual growth rate and more than $6.5 billion in adjusted earnings before interest and taxes. Adjusted EBIT is a profit measure that excludes interest, taxes and certain adjustments.
What happened to Intel stock?
Intel is being added after what CNBC’s Investing Club called a sharp reversal on Friday. The Club said Intel reported second-quarter results that were much better than expected, with adjusted earnings per share at twice the consensus estimate.
Even with that earnings beat, Intel shares fell about 7% Friday during a broader sell-off in semiconductor stocks, according to the Club.
One pressure point was concern about rising capital expenditures, the Club said. Capital expenditures, often called capex, are company investments in long-term assets. For Intel, the Club framed higher spending as a sign that the company is confident it can win customers for its third-party foundry business, which makes chips for outside clients.
CNBC’s Investing Club disclosed that Jim Cramer’s Charitable Trust is long INTC, HON and HONA. The Club also said subscribers receive trade alerts before Cramer trades, with a 45-minute waiting period after an alert and a 72-hour waiting period if he has discussed the stock on CNBC TV.
This story draws on original reporting from CNBC.
