GE Looks Very Attractive Here

A 10yr chart of General Electric (GE) reveals the company has seen the $20 level only three other times in previous cycles, and each time quickly bouncing from it (click to enlarge):

In the late 90s, GE just touched 20 and quickly bounced:

In the previous bear market from 2002, GE quickly bounced from 19 twice:

Currently GE is at a situation where a quick breach of 20 will most likely take place again…

GE Capital is a drag on earnings at the moment, and if/when credit markets ease up, the cost of borrowning will reduce and benefit GE. The industrial side may see a slowdown due to the global slow down, but still, GE is very attractive here. It is a cheap stock, and as good as it gets with respect to a strong company that is yielding +5% as you wait for things to improve.

Disclosure: No positions

Comments

[crankyinvestor:]

GE looked very attractive at 28 too.

2008 Oct 06 06:53 AM

[Khaleel:]

History does not repeat..it rhymes!
There could be a breakout below $20 even though it may be unlikely as markets can remain irrational longer than investors can remain solvent.
I would keep a very close eye on this stock though to get a very good entry point and then pretty much forget about it.

2008 Oct 06 07:05 AM

[pelican:]

For the first time in 33 years GE did not raise its dividend this year. Over 40% of profits have come from their finance division. While I agree that GE is looking attractive, I also believe this bear market cannot be compared to the more recent bear markets. With earnings growth in 2009 expected to be zero to single digit, and maybe into 2010, I wonder if we are seeing another PFE; high dividend, good balance sheet, little growth. I see $18 as an entry point.

2008 Oct 06 07:16 AM

[Jadip:]

The sky is falling! The sky is falling! There is blood in the street! Buy, buy, buy.

2008 Oct 06 08:12 AM

[User 201843:]

$18 or even a little less.... agreed. Dont forget Buffet got preferred stock.... so discount that out to get your price!

2008 Oct 06 08:15 AM

[sieraromero:]

I want to buy it to,but not at these levels. I want the deals and the dividends that W.Buffet gets. This will get more reasonable in the future, but why do you think they are selling stock at these levels? It surely isn't the fact that they believe the stock is going up and they want to give the opportunity for joe 6pack to get in at such "reasonable" levels. Just recently they said they were not having any problems in their financial division. Of course alot of other banks said that to. And we know to take the CEO's word to the bank don't we. That is why they deserve their big saleries that are 300-400 times their average worker compared to less than 10 to 30 times that in the rest of the industrial countries. Oh, and let's not forget that they need tax breaks so that they can trickle down to the rest of us regular Joe 6packs! Good Luck to you all!

2008 Oct 06 09:13 AM

[liu jian zhong:]

It's not impossible GE will be halfed this week.

2008 Oct 06 10:02 AM

[Norman Lepo...:]

Jeff Immelt has lost his credibility and so has GE. GE looked "attractive" at 30, remember?

2008 Oct 06 10:11 AM

[Echo To All:]

I never thought GE was attractive in the high20s/low 30s. I simply like it in the low 20s... time will most certainly tell.

2008 Oct 06 10:24 AM

[CT Programmer:]

EVERYTHING looks attractive right now! Not just GE. Valuations are just plain out the window and right now everyone is just waiting for a bottom on anything, not just GE. Technicals are worthless. CHK and XTO are hovering above a fwd PE of 6. Dry Bulk shippers are less than 3. Freeport is less than 4 and Southern Copper is at 5. XOM is about 8. ConnocoPhillips is 5. The fertilizer companies, which are rolling in cash, are hovering between 2 and 4.

But even if you bought GE now (or virtually anything), you'll be rewarded long term. I wish I had waited a little longer. I thought below $30 was great. $20 of course would have been better. But my crystal ball was broken at the time. At any other time, a stalwart like GE at a fwd PE of 10 would be jumped on by anyone. But this is not any other time. THESE ARE CRAZY TIMES! Just buy with whatever spare cash you have and sit. Proper valuations will return over time.

2008 Oct 06 10:58 AM

[GreenBlogger:]

I'll say it again... GE needs to be broken up into pieces into stand-alone units, then either sold off or spun-off to shareholders. And, it needs to be done fast... The beast is too big for its britches; Immelt looks like the proverbial Dutch boy trying to hold back the dike by plugging the leaks with his fat little fingers.

2008 Oct 06 11:15 AM

[Fremont Rea...:]

I agree that GE needs to be broken into smaller pieces as do all all large banks.

2008 Oct 06 12:36 PM

[Urbane Gori...:]

GE, FCX, NUE, X, NVS, PFE ... They all look cheap here.... Getting tired of them screaming through my stops though ... jegan ;-)

2008 Oct 06 04:15 PM

[fanning:]

GE and banks are issuing more new stocks, hence dilution, watch out.

2008 Oct 06 06:23 PM

[belkina:]

What will happen to the dividend with the recent dilution?

2008 Oct 07 06:59 AM