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One of the interesting things about listening to people who have strong beliefs about something they don't follow closely is thinking about where those ideas came from. Is it fact or folklore?

GE (NYSE:GE) is one of the most well-known companies in the world, and while there continues to be strong evidence that the company has finally turned around its operations and refocused the company's efforts on its most successful businesses, many investors simply refuse to invest the leading multinational because of the strong and negative view of the current management team.

Essentially, there is a view that a company owned by Jefferey Immelt cannot be owned.

The reality is that the legacy of Jack Welch is more folklore than reality as well. First, it really wasn't that hard to perform well as an American CEO with the U.S. economy growing at 6% a year and stock market going up 20% a year on average from 1980 to 1998. Second, Welch's best skills were about engineering profits with often useless acquisitions, not organically growing this business. When Jeffery Immelt took over, the company was over-bloated and ill positioned for the new and more global economy.

Today GE is a new company. It has had to stream-line and spin-off many businesses that were great in previous decades, but clearly aren't where management wants to focus today. The company continues to spin-off divisions of GE Capital, and GE's industrial divisions are now nearly 70% of the company's revenues. GE capital made up nearly 70% of the company's revenues during the previous decade, and the company has consistently and significantly outperformed the S&P 500 and its tracking exchange traded fund, SPY (NYSEARCA:SPY).

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GE has consistently grown its earnings by 6-8% over the last several years, and the company's industrial division in energy, health care, infrastructure, continues to grow at a double digit pace. As GE rec-enters its business model on its faster growing industrial divisions, the company should be able to borrow at lower rates, increase the payout ratio, and begin to accelerate its growth rate. GE also had its best quarter in three years in the first fiscal quarter of this year.

GE is also very well positioned for the future. The company has businesses and products in key service and industry segments likely to grow significantly in the U.S. over the next several years, such as health care and energy. The company's strong industrials divisions in aerospace, infrastructure, and finance, also position the leading industrial very well for growth overseas as well.

General Electric's industrial divisions have showed consistent mid-single digit growth over the last three years, and the company's infrastructure, health care and transportation divisions all showed double-digit growth of recent as well. General Electric's recent quarter was not only its best in over three years, it was also the company's 8th consecutive quarter of impressive revenue growth. General Electric also raised its dividend by over 13%, and the company's payout ratio is a conservative 45%.

General Electric has finally focused its business model on its industrial divisions, and in addition to spinning off CNBC last year, the company plans to sell-off significant additional assets from GE Capital as well. General Electric had actually suffered for years from many of the excessive acquisitions Welch and previous CEOs made, and while Immelt has been blamed for the poor recent performance of the stock, the company was likely moderately to significantly overvalued under Welch, who relied more on acquisitions and cost-cutting to increase growth.

To conclude, while many people continue to blame Jefferey Immelt for the company's poor recent performance, popular folklore is not always fact-based. Immelt inherited an over bloated $300 billion dollar company that was very poorly positioned for the future, and the new CEO has done a very good job repositioning the company in new and faster growing businesses.

GE has consistently outperformed the S&P 500 by a wide margin for the last year, and the stock trades at a very conservative multiple of 12x average earnings estimates for next year, and the company's earnings have held-up very well over the last several years. While Jack Welch was great, every generation has successful leaders, and these individuals are not any more superhuman than the stars and standouts of previous generations.

Source: Why Jack Welch Is Overrated, And Why You Should Buy GE