Selling Verizon To Buy GE: Same Value, and With Growth

Includes: GE, VZ
by: David Neubert

I've been buying General Electric (NYSE:GE), what to sell?

I sold my entire position in Verizon (NYSE:VZ) to make room for more General Electric (GE).

My data below is from First Call. In general, the stocks don't look that different. But I like the General Electric business mix (finance, electric turbines (wind and power), consumer products, healthcare etc.) much better than Verizon's super competitive businesses (land phone service, cable and wireless phone services).

In terms of culture, while there are plenty of fine people working at Verizon, I'm still not sure they have the kind of 'grow grow grow' culture they have at GE. I know that Verizon wants to change this but large corporate cultures that are used to operating as a regulated monopoly are hard to change. This is the first time I've seen these two stocks at comparable valuations. All else equal, I'll go with better growth oriented butt-kicking managers.

GE: ($34.77)

Dividend Yield: 3.23%

Expected 5-year Earnings Growth: 10%

Trailing P/E: 17.3

2007 P/E: 15.5

2008 P/E: 13.5

Verizon (VZ): $36.75

Dividend Yield: 4.4%

Expected 5-year earnings growth: 5%

Trailing P/E: 14.5

2007 P/E: 15.7

2008 P/E: 14.5

Disclosures and Confessions: I own and have been accumulating General Electric (GE) for some time. I am short January 2008, 30 strike puts on GE. I sold and no longer own Verizon (VZ). I do not use Verizon land line services at all. My home phone service is provided over cable by Vonage (NYSE:VG). Sadly, I own Vonage (VG).

GE-VZ 1-yr comparison chart:

GE-VZ 1-yr comparison chart