The old saying what's good for the Generals is good for America is true when we look at General Electric (GE). The company is so large and diverse not only in the U.S. but also on a worldwide basis that it's hard for them to outpace the economy in revenue, but they do an excellent job in controlling expenses. Right now the stock is enjoying upward momentum as this graph provided by Barchart shows:
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General Electric Company operates as a technology, service and finance company worldwide. The company's Energy Infrastructure segment offers wind, gas and steam turbines and generators; combined-cycle systems; nuclear reactors, fuel, and support services; and motors and control systems, as well as providing water treatment solutions. This segment also provides integrated electrical equipment and systems to distribute, protect and control energy and equipment; and oil and gas equipment, including surface and subsea drilling and production systems, equipment for floating production platforms, compressors, turbines, turbo expanders, high pressure reactors, industrial power generation, and auxiliary equipment.
Its Aviation segment produces and sells jet engines, turboprop and turbo shaft engines, and related replacement parts for use in military and commercial aircraft, as well as provides maintenance, component repair, and overhaul services. The company's Healthcare segment provides medical imaging and information technologies, medical diagnostics, patient monitoring systems, disease research, drug discovery, and biopharmaceutical manufacturing technologies, as well as remote diagnostic and repair services. Its Transportation segment provides technology solutions for customers in various industries, including railroad, transit, mining, oil and gas, power generation, and marine.
The company's GE Capital segment offers commercial loans and leases, fleet management, financial programs, home loans, credit cards, personal loans, and other financial services. Its Home and Business Solutions segment provides refrigerators; freezers; electric and gas ranges; cooktops; dishwashers; clothes washers and dryers; microwave ovens; room air conditioners; and residential water systems primarily under the GE Monogram, GE Profile, GE, Hotpoint, and GE Café brand names. The company was founded in 1892 and is based in Fairfield, Connecticut. (Yahoo Finance profile)
Factors to consider:
Barchart technical indicators:
- 80% Barchart technical buy signal
- Trend Spotter buy signal
- Above its 20, 50 and 100 day moving average
- 14 new highs and up 11.58% in the last month
- Relative Strength Index 70.00%
- Barchart computes a technical support level at 18.42
- Recently traded at 18.78 with a 50 day moving average of 16.73
Fundamental factors:
- 15 Wall Street brokerage firms have assigned 17 analysts to follow this stock
- Although analysts expect revenues to be down .50% this year they expect an increase again of 1.90% next year
- Earnings expectations are the story with an estimated increase of 22.30% this year, 13.90% next year and a 13.43% annual increase of earnings over the next five years
- These forecasts resulted in analysts issuing five strong buy, nine buy, three hold and no under perform or sell reports
- The P/E ratio of 14.40 is in line with the market P/E of 14.50
- The 3.61% dividend rate is less than half of estimated earnings and more than the market's dividend rate of 2.30%
- The divisions producing for the bottom line are energy infrastructure, transportation and GE Capital
- Aircraft engines are also having a great year
- In emerging markets GE is really pursuing opportunities in the BRIC nations
- Analysts consensus for price appreciation is between 24% - 30% annually for the next five years
General investor interest:
- I use the readers of Motley Fool to gauge the thoughts of the individual investor and with 16,386 readers following this stock it is the third most followed stock on the site
- Of the readers giving an opinion 94% voted the stock will beat the market
- The more experienced All Stars voted 95% for the same result
- Fool noted that all 36 of the last articles they read were all positive
- Some people giving positive opinions on the company are Jim Cramer, Chris Davis, Tobin Smith, Warren Buffet and Gary B Smith
I think you should always look at the price momentum of a stock over the past year against comparable stocks. With GE both a manufacturing company and a finance company I noted General Electric was up 1%, Citigroup (C) down 38%, Philips (PHG) down 41% and Siemens (SI) down 20% over the past year:
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Summary: General Electric is so large that they reflect the economy. Cost savings and being in the right products in the right market are the sweet spots. There is still room on the upside for this stock. As always follow the 50 day moving averages or 14 day turtle channel to guide you on entry and exit points:
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Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GE over the next 72 hours.
