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This article is part of an ongoing series that highlights specific companies that are on sale. It helps me to document my thought processes when I add to my holdings or initiate new positions. Please provide your feedback in the comments section below.

General Electric (NYSE:GE) is currently offering investors an opportunity to buy portions of the company at just over $24/share. The stock has been consolidating in the $23-$25 level for the past six months and may provide a good entry point. This is a few percent off the 52-week high, hit about a month ago at almost $25 per ownership interest. General Electric has been trending slowly up for the past year. Twelve months ago, the stock was below $20. This pullback in the past few weeks provides long-term investors with a good opportunity to initiate a position.

GE has a business model that is simple and sustainable. it provides equipment and infrastructure for power companies, oil and gas companies, aviation and aerospace companies, transportation companies, healthcare companies, and even the military. In short, General Electric supplies a fraction of the overall economy and is not limited to one industry, which might be cyclically limiting. According to the 2012 Annual Report, cash flow from operations increased 45% year-over-year and operating earnings grew over 8%.

Despite the growth, I believe that General Electric trades at a discount to its true valuation. GE currently trades at under 17 times ttm earnings and about 13 times project next year earnings. In the recent past, GE Capital (a financial division of GE) has been a drag on earnings for GE, which has announced that it intends to reduce or exit GE Capital's operations. Once this happens, GE's profitability should increase by quite a jump, which will be a huge catalyst for the company. In the meantime, I'm content to accumulate shares at this perceived discount.

Additionally, General Electric is turning into a cannibal. GE has been buying back its own stock and has indicated that it intends to keep doing so. According to the 2012 Annual Report, "We plan to buy back shares to get below 10 billion, where we were before the crisis. We will make significant progress toward that goal in 2013..." Just one year ago, there were 10.6 billion shares outstanding. Today, there are about 10.2 billion shares, indicating that GE has bought back about 4% of shares outstanding in the past year. This is a large percentage, where most companies tend to buy back a percent or two.

With GE planning to buy so much of its outstanding shares, let's look at how that will affect earnings. Analyst expectations are very low. Analysts are expecting a consensus EPS of $0.37, which is only a penny more than the prior year's EPS of $0.36. Analyst consensus for revenue is $35.8 billion, which is significantly lower than the prior year's revenue of $36.3 billion. It doesn't appear that analysts are expecting much, if anything, from GE. With GE's large share buyback activity, it wouldn't have to make more in total earnings to affect the bottom-line EPS. I believe that General Electric will have a positive surprise, and this is the catalyst that will cause GE's stock to break above it's 52 week high and close substantially higher at the end of 2013.

Additionally, GE has an above-average yield. You literally get paid to wait. General Electric has a current yield of 3.25%, and the company has indicated that it wants to keep the yield up. According to the 2012 Annual Report, "We like GE to have a high dividend yield, which is appealing to the majority of our investors." During the financial crisis, GE cut its dividend to an annualized $0.40. Since then, it has raised its dividend five times, most recently to $0.76 per share. Were GE to raise its dividend for 2014, it would be the fifth year in a row to have a higher dividend. Next year, it will be added to the Dividend Challenger's list, which will cause more people to be looking at it. Now is the time to get in, before the increased attention.

Additionally, General Electric is sitting on almost $9 per share of cash. This is over 11 years' worth of dividends at the current level. I believe that a dividend increase soon and a positive earnings surprise will be two catalysts that will proper GE's shares higher.

As always, this article represents my opinions at the time of writing. You should do your own due diligence before making any decisions. However, I believe that GE represents a quality company that is trading hands at a discount.

Source: General Electric's Hidden Source Of Value