With the third quarter winding down, many of the top firms that we cover here at 24/7 Wall St. are starting to make some final tweaks to portfolios for the fourth quarter run. Some are taking advantage of stocks that have been sold off during the recent volatility and market correction that started in late August.

In a new report, the UBS team that covers the quality growth at a reasonable price (Q-GARP) portfolio makes a change by adding a top industrial stock. The portfolio, which has outperformed the S&P 500 since inception, is up 3.5% this year, versus the 3.3% decline in the index.

Honeywell International Inc. (NYSE: HON) makes its debut on the Q-GARP portfolio. This big cap multinational announced this summer its largest purchase in more than a decade, when it agreed to buy the utility consumption metering business of Britain’s Melrose Industries for about $5.1 billion. This is the first major deal for Honeywell since it laid out a five-year plan in March 2014 to target at least $10 billion in acquisitions. Wall Street has been very eager to see how industrial companies use their capital as many of the foreign markets struggle for growth.

Honeywell’s operations are organized under three business groups: Aerospace, Automation & Control Solutions, and Performance Materials & Technologies. The company is a premier supplier of avionics, power and control systems for the aerospace industry. The UBS team loves the exposure the company has to the “energy efficiency” secular growth theme, where 50% of revenues are derived.

Honeywell investors are paid a 2.06% dividend. The Thomson/First Call consensus price target is $116.16. Shares closed Tuesday at $100.32.

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We found three other conservative stocks in the Q-GARP portfolio, two of which are also industrials, that also look like solid buys now.
Boeing

This top aerospace industrial has sold off recently and is offering investors a very solid entry point. Boeing Co. (NYSE: BA) has been on a downward trend since late February and now may be ready to perk up. The company together with its subsidiaries, designs, develops, manufactures, sells, services and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services worldwide.

Boeing investors are paid a solid 2.67% dividend. The consensus price target is $164, and the shares closed on Tuesday at $136.30.

Home Depot

This top retail stock could be poised for a very solid end of 2015 and next year. Home Depot Inc. (NYSE: HD) is already on the UBS Consumer Discretionary Most Preferred list and pulled back hard late last month with the market, giving investors a good opportunity to buy stock. The UBS analysts have noted in the past that home improvement spending continues to stand out within the U.S. retail sales categories, and domestic household formation has meaningfully improved over the past six to 12 months. That is in addition to a spike in new home construction.

Home Depot investors are paid a 2.03% dividend. The consensus price target is $131.61. Shares closed most recently at $116.18.

United Technologies

This is another diversified company with large government contract exposure. United Technologies Corp. (NYSE: UTX) is an industrial that provides high-tech products and services to aerospace industries and building systems worldwide. Its segments are UTC Climate, Otis, Controls & Security, UTC Aerospace Systems and Pratt & Whitney.

Since peaking in late February, the stock has rolled over and not acted well, so current trading levels offer investors an outstanding entry point. Many Wall Street analysts believe the company is strategically positioned to benefit from two megatrends in the long-term: urbanization and commercial aerospace. The completion of the Sikorsky division sale to Lockheed this summer was viewed by many on Wall Street as preferable to a spin-off after the premium that Lockheed Martin paid was willing to pay made up for the tax cost United Technologies would have incurred.

United Technologies investors are paid a 2.77% dividend. The consensus price target is $112.19. The stock closed Tuesday at $92.68.

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The Q-GARP portfolio has numerous top stocks to buy that have been hit hard since last August. These three, plus Honeywell, make good sense for long-term growth portfolios looking to add large cap companies now.

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