General Electric: Buy Now and Wait

General Electric (GE) - a company that actually pays you per share every quarter. During the dot com boom, did you ever think of investing in GE? The time has come to set on our eyes on steady, not rocket, stocks.

With the U.S. financial sector continuing to show signs of further troubles pertaining to the subprime mortgage market, GE represents a value play.

A recent article in the Wall Street Journal states that GE Energy Financial Services unit will invest $5 billion by 2010 in energy and water projects in the Middle East, Latin America, and Asia. This is based on the assumption by GE that the emerging markets will grow faster than the U.S. in the near term. GE represents a major international player that has been operating since 1892 and has the cash on its balance sheet to feed its growth. The diversified conglomerate is involved in everything from television stations to steam turbines.

General Electric closed at 31.70 on Monday, yielding a healthy 3.9% dividend. The stock is on the doorstep of its 52 week low and looks like a buy to me at these levels. With a market cap of 316.55 billion and a P/E under 15, the theory buy now and wait looks like a tremendous strategy.

Time to take a position in General Electric and reap the benefits over the years.

Disclosure: Author has a long position in GE

Comments

[Norman Lepo...:]

I agree with Mr. Goldberg.

2008 Mar 11 10:56 AM

[robert99:]

How large is GE's finance division, and what kind of debt do they own?

2008 Mar 11 11:05 AM

[simplesimon:]

Of all the grand old U.S companies, GE is one with all its irons in all the right fires - namely energy, finance, innovative development, international, and not just poised for lucrative contracts, but already has them in pocket. AFI ( adjusted for inflation) GE is a great candidate for long term -with the dollar driven to a 'dime' by all standards; this, in my view, is the dream ticket at $3.20 a share(AFI) we all wish we had bought 'back when'...back when what? Back when the heebie jeebie securities market was all 'a-doomsdaying'. If you think about it, the media makes a lot of dough pointing out some 'disturbing new frightful thing' ..and does so every single day. Jungle hunters ussed to do this, via the whole village gathering to beat on drums, and drive the prey into a trap. Well. your lion is in the trap. Go get a piece of it. ( disclosure: bought , then sold, and am now waiting on a low price like this one-still waiting and watching for a 'bottom' - Perhaps one more round of economic 'booga-boogla' will do it. )

2008 Mar 11 11:16 AM

[tessant:]

great article, and totally agree. the alt energy play of GE cannot be ignored.

scott
growthportfolio
"the facebook of investing"

2008 Mar 11 12:29 PM

[pockyclips ...:]

Conventional and wind turbines, nuclear, defense contractor. Will have majority of jet engine orders for Dreamliner. And the only original Dow 30 stock left. Probably the best buy and hold out there. I am.

2008 Mar 11 01:34 PM

[Philly Jim:]

Let's just hope they get their act together in India, we don't want to upset our friends in the East.

2008 Mar 11 06:38 PM

[pesky pete:]

Did we hear this 10 years ago? Average annual total return of GE for those last 10 years is 4.2%. Looks like dead money to me. Of course we can't judge the future by the past. But MSFT, PG, JNJ, PEP, IBM, CVX, D, GD, to name but a very few, have all done better and may continue to do so. And for a proxy SI it seems would be about a 2 or 3 times better choice.

2008 Mar 11 09:41 PM

[moneygardener:]

I agree that GE is a buy currently, just hope it doesn't get away from me...

2008 Mar 12 02:06 PM

[ALue167:]

I can't handle the $500+ billion debt load.

2008 Mar 12 11:06 PM

[25YearForme...:]

I have been long and riding this up and down for years. Jeff hasn't brought the company along as quickly as Jack, but his last message has the right tone. Everyone is in a panic attack - GE is steady as a Rock. As for the 4.2% in the past 10 years, you might want to add back in the 3% annual dividend and compare again.

2008 Mar 13 10:40 AM

[Fabien Hug:]

Be careful. The market is down and there is nothing in sight to predict an improvement. This thread gives me the same feeling as the case for Google I read a week ago in SeekingAlpha. It is not wise to go long on any stock when the market is clearly bearish; In these troubled times some have to sell good investments to cover margins or losses on bad investments.
If GE is a go and given the actual market mood, I would rather enter with a call and put the cash into a CD or do something similar through a preferred stock or a convertible bond. The key being to preserve the capital.

2008 Mar 13 01:25 PM

[ShortTermCa...:]

<i>During the dot com boom, did you ever think of investing in GE? </i>

Yes, I bought it in 1998, first thing in the morning after the day the credit markets locked up. At the time I felt it was a marginal value in a valueless market. I figured I would own those shares forever, but in little more than a year the price had more than doubled and the p/e was north of 50. I sold out, and only bought back in last spring at just under 35. The shares are a steal today, in my opinion.

2008 Mar 13 09:33 PM