GE: Owning The Future Or Stuck In The Past?

Feb.13.12 | About: General Electric (GE)

Much has been written about a stock that I have personally owned for quite some time now. General Electric (NYSE:GE) has disappointed me basically forever, it seems. Yet I feel connected to it on so many different levels.

Seems like yesterday that the only thing GE was known for was its light bulbs and lousy small appliances (and lousy big ones also, if I recall properly) that my mother would curse at whenever the darn toaster burnt our Wonder bread.

Fast forward 50 years or so, and take a look at today's GE:

Price: $18.88/share
Dividend Yield: 3.65%
ESS Rating: Bullish

General Electric Company (<a href='' title='General Electric Company'>GE</a>)

Obviously, GE is more than a price per share, more than a dividend yield, and more than a light bulb. Never before has a company been so entwined in all of our everyday lives. Every human on the planet already owns a piece of GE, maybe even without even knowing it.

The reach of this company is beyond our imagination. GE is part of everything. No other company is so tied to our economy, our financial health, our physical health, as well as our political health, as General Electric is today. One could take an old saying used to describe Mickey Mantle and the New York Yankees of the 1950's "As The Mick goes, so go the Yankees." "As the economy goes, so goes General Electric" could be the mantra of this decade.

GE is involved in the following:

  • Technology
  • Business Services
  • Financial Services
  • Nuclear Energy Facilities
  • Natural Gas Development
  • Alternative "Green" Energy
  • Aviation, both commercial and military
  • Healthcare Equipment of virtually every kind
  • Information Technology for any business, especially in the medical field
  • Railroads, marine engines, credit cards, personal loans, leases, retail credit programs, manufacturing credit programs, automobile fleet management programs
  • Plus those small appliances, large appliances, and light bulbs

Many would say that a company of this nature is simply too big. Too cumbersome to manage, and not focused. Many would malign (and have) its CEO Jeff Immelt, his politics, his management style, and under his watch a meandering shareholder value that has left even the most loyal stakeholders wondering if the company will ever perform.

GE has truly been a "sleeping giant." Let's look at some developments in various categories:

In an improving economy of which many are still skeptical, GE has announced plans to hire more people (including a significant number of former military personnel) for highly skilled positions, both entry level as well as experienced, in the manufacturing sector in the U.S., which not only reinforces the continuing improvement of our economy, but shows GE's commitment to making it happen throughout the nation.

GE is lending more, which also reflects its confidence in the economic climate as it also expands its own financial sector. This will enable other businesses to expand now and into the future for a growing economy.

The NRC has approved the first nuclear facilities since 1978 for Southern Company (NYSE:SO), which could have far reaching earnings and revenue growth patterns for GE since they are one of the largest builders of these facilities on the planet. Once the doors open for more nuclear facilities, GE will only benefit from their positioning in this sector.

GE's technology and medical device divisions are also expanding by developing state of the art imaging devices taking them to its highest levels yet, and since GE is the leader in this sector, deeper penetration with superior products will only mean even more revenues and earnings for GE.

When we review the recent jobs data, although arguments can be made for both sides, unemployment has dropped to 8.3% which is a forward leading indicator of the economy, even though consumer sentiment dropped last month, which is a trailing indicator.

To be sure, the economy is not at full steam yet, but there are signs of growth and renewal. We might have a ways to go before everything is wonderful, yet GE is investing in the growth of our economy, and that of the global economy as well. It is a very compelling sign to me.

I believe that the giant is awakening.

Recent Performance

It has not been pretty, that's for sure. GE's 4th quarter earnings and revenues were down and they even said that this year will be another difficult environment to navigate, but maintain their 5-10% overall growth rate, which is less than Earth-shattering, I suppose, but could be worse.

The share price has actually been improving, however. Back in August it was $15.09/share, and as recently as this past Thanksgiving it was about $14.70/share. Since that time GE has risen over 30%. As I stated previously, as the economy goes, so goes GE. There have been undeniable signs that our economy is improving. The unemployment rate has dropped, income has risen a bit, even credit card debt is up.

Keep in mind that GE is a global conglomerate, so attention must be paid to what's going on all over the world: the euro mess, the Middle East's everlasting issues, and a potential slow down in China. Where does that leave investors of GE stock? I guess it depends on whether you think our future is bright, or our future is dark.

My Opinion

I believe that our economy has become better. I believe that the issues in Europe will be dealt with without a catastrophe. I also want to believe that the rest of the world is saner than some headlines make it appear.

Since GE is part of my life, how can I not believe that we are about to see brighter days ahead for it as well? It would contradict my opinion of the future if i thought that it was not bright. Owning GE shares now shows faith in our future. I believe the stock to be undervalued based on everything GE represents in our lives today and tomorrow. The past was yesterday. I vote for our future.

Disclaimer: Please do your own research and do not buy or sell any security based on opinions expressed here. Your personal investment needs and goals, as well as risk tolerance should always be evaluated beforehand.

Disclosure: I am long GE, and buying shares of SO today,