The Nasdaq Just Hit Correction Territory: 2 Pullback Stocks to Buy and Hold for a Decade

7 hours ago

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Broad-based market sell-offs are often great times to initiate long-term investing positions. In fact, they can give investors just the nudge they needed to buy stocks that already looked like great values before the market declined. With the Nasdaq Composite (NASDAQINDEX: ^IXIC) falling into correction territory, I think blue-chip industrial conglomerate Honeywell International (NASDAQ: HON) and advanced materials company Hexcel (NYSE: HXL) are terrific stocks to buy now.

Having already announced plans to spin off one segment, Honeywell management went a step further last month and said the company would split into three separate businesses, all of which will be publicly traded. There's a case for all of them to outperform in the future as individual companies -- not based on a sum-of-the-parts evaluation, but because some of Honeywell's peers have already set a profitable example.

With the advanced materials spinoff already announced, the focus is on the two other businesses, Honeywell Aerospace and Honeywell Automation. Management names GE Aerospace, RTX, and TransDigm as its peers, and it's noticeable that all three have undergone significant corporate activity in recent years. GE Aerospace became an independent company last year, and RTX's commercial aerospace businesses are the result of mergers of the former United Technologies aerospace business, Rockwell Collins, and the commercial aerospace businesses of Raytheon. TransDigm's business model relies heavily on its strategy of acquiring other companies.

As a stand-alone company, Honeywell Aerospace will have much more flexibility to pursue acquisitions that will build scale like its peers. As such, it can add complementary solutions to its portfolio of aerospace solutions, including avionics, auxiliary power units, communications, and propulsion systems.

A business jet.
Image source: Getty Images.

It's a similar story with Honeywell Automation, a combination of industrial automation and building automation. Emerson Electric, pure-play automation company Rockwell Automation, and Johnson Controls are cited as peers. Emerson has been fundamentally restructured in recent years to focus on automation and adjacent markets in industrial software and automated test and measurement. Management sold its climate technologies business, acquired NI (test and measurement systems) in 2023, and will acquire the remaining shares it doesn't own in industrial company AspenTech this year.

In building automation, Johnson Controls is selling its residential and light commercial HVAC business to Bosch as it looks to focus on its core commercial HVAC and building controls business.


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