I have been a bull on General Electric (GE) since late summer when it was trading around $15 a share. The company has passed $20 and has shown strong momentum in 2012. Given its valuation and positive catalysts, I think the company can hit $25 by the end of the year.
Key recent GE hightlights.
- The perception and ratings on GE Capital continues to improve as it shrinks its balance sheet.
- This should mean additional dividends to GE shareholders.
- JP Morgan is getting more positive on the stock.
- Even Jim Cramer is becoming a strong advocate of the stock.
General Electric - "General Electric Company operates as a technology and financial services company worldwide." (Business Description from Yahoo Finance)
4 reasons General Electric is still a solid buy at $25 a share:
- General Electric has beat earnings estimates in 11 of the last 12 quarters as analysts underestimate its earning power.
- The company yields a solid 3.4%, boasts an AA+ credit rating, and it is highly likely dividends will increase at an accelerating pace over the next several years as GE Capital's balance sheet continues to improve.
- It has a five-year projected PEG of just over 1 (1.04), which is a 30% discount to its five-year historical average.
- The stock is selling at less than 11.5 times forward earnings, an over 15% discount to its five-year historical average. GE also sells at just around 7 times operating cash flow.
Disclosure: I am long GE.
