Honeywell traces its roots to 1885 with Albert Butz’s firm, Butz Thermo-Electric Regulator, which produced a predecessor to the modern thermostat. Other inventions by Honeywell include biodegradable detergent and autopilot. Today, Honeywell is a global multi-industry behemoth with one of the largest installed bases of equipment. It operates through four business segments: aerospace technologies (37% of 2023 company revenue), industrial automation (29%), energy and sustainability solutions (17%), and building automation (17%). Recently, Honeywell has made several portfolio changes to focus on fewer end markets and align with a set of secular growth trends. The firm is working diligently to expand its installed base, deriving 30% of its revenue from recurring aftermarket services.

Artificial intelligence has redefined the way certain industries operate within the Industrial sector, leading to notable advances in aerospace & defense, construction & engineering, and manufacturing. Why does this matter for investors? It makes companies more efficient and allows management to focus on profits and company goals. In aerospace & defense, AI is used in flight operations to analyze weather and air traffic data. Sensors also run predictive analytics that identify potential problems with an aircraft. In defense, AI provides tools for strategic decision-making, threat monitoring, and cybersecurity. Indeed, when defending against cyber-attacks, technology can learn patterns and create improved layers of protection. In construction and engineering, AI can optimize the design process, using advanced algorithms and simulations to identify the best configurations and optimal product performance. AI also has capabilities to efficiently allocate resources on a construction site and anticipate potential risks. The technology can provide real-time insights that help in negotiations with suppliers, task organization, and risk prevention. In manufacturing, AI solutions are analyzing production data and demand forecasts to streamline production schedules and resources planning. It is also improving the effectiveness of order-management systems to decrease fulfilment lead times. Studies by McKinsey have concluded that machine downtime can be reduced by 30%-50% and quality costs can be decreased by 10%-20%. Others have predicted that AI in manufacturing will be a $21 billion market by 2028. The following is a list of Argus BUY-rated stocks in the Industrial sector that are leaders in the use of AI.

Honeywell, based in North Carolina, is a diversified technology and manufacturing company. The company's shares are a component of the Dow Jones Industrial Average and the S&P 500. Honeywell has approximately 95,000 employees.

Monday Tee Up: Fed, Jobs, Earnings This week features more earnings from corporate giants, key jobs data, and a Fed rate meeting. It doesn't get much busier than that, especially for a week in the heat of summer. But spoiler alert on the Fed: no one thinks a rate move is coming this week and odds are at zero. Last week, the markets were again volatile. The Dow Jones Industrial Average ended up 0.8%, the S&P 500 lost 0.8%, and the Nasdaq fell 2.1%. Year to date, the DJIA is higher by nearly 8%, the S&P is up 14%, and the Nasdaq is higher by 15%. On the economic calendar, the Federal Reserve rate decision comes on Wednesday and economists expect no movement. As usual, analysts will dissect what Chairman Powell says in the press conference. Odds are high for a rate cut in September, so Wall Street will be looking for verification that the Fed is leaning in that direction. On Friday, the important July jobs report is due. In June, Nonfarm Payrolls came in at 206,000. Argus sees that declining to 185,000 for July. The unemployment rate was 4.1% in June. We expect no change for July. Meanwhile, Job Openings, Consumer Confidence, and the Case-Shiller Home Price Index will be reported on Tuesday. On Wednesday, the ADP Private Employment report is due out, and on Thursday, ISM Manufacturing and Construction Spending hit the tape. On the earnings calendar, Monday brings news from McDonald's. On Tuesday, Microsoft, Advanced Micro Devices, Procter & Gamble, Pfizer, Merck, and Starbucks report; on Wednesday, Meta, Qualcomm, Boeing, Altria, and Kraft Heinz; on Thursday, Apple, Amazon, Moderna, Booking Holdings, and Coinbase; and on Friday, Chevron and Exxon Mobil. Earnings so far have been coming in 12.1% higher this quarter than a year ago, and 41% of S&P 500 companies have reported. Expectations are for earnings growth of 8%-12% for 2Q. This follows 8% growth in 1Q and 10% in 4Q23. At Argus, we expect EPS for all of 2024 to come in roughly 8%-9% better than last year. Last week featured good news on inflation and economic growth. The Personal Consumption Expenditures Index showed that inflation slowed to 2.5% in June versus 2.6% in May. Core PCE didn't budge, sticking at 2.6%. The initial reading for second-quarter GDP came in at 2.8%, a big jump from 1.4% in 1Q. Mortgage rates ticked up a hair to 6.78% for the average 30-year fixed-rate mortgage. Gas prices fell 3 cents to $3.47 per gallon for the average price of regular gas. The Atlanta Fed GDPNow indicator is forecasting for 3Q and calls for expansion of 2.8%. The Cleveland Fed CPINow indicator forecasts 3.01% for CPI in July. After this week's Fed rate decision, the next one is in mid-September -- and odds at 99% for a cut at that meeting. Of that, 88% expect a 25-basis-point (BPS) cut, while 11% expect a 50 bps cut. As the probability is so high for a rate cut at the September meeting, odds are at 68% for a second cut in November, but a higher 98% for that second cut to take place on December 18. All of this data is according to the CME FedWatch Tool.