General Electric: Dividend And Technical Support Should Put Floor Under Stock Price

| About: General Electric (GE)
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The last few months have not been kind to General Electric (NYSE:GE). Concerns about slowing worldwide growth and the ongoing European debt crisis have conspired to knock 25% off its stock price. However, GE’s solid and growing dividend, low valuation and technical support levels should put a floor under its stock price at current levels. It is also well positioned to be a long-term winner in the global economy.
“General Electric Company operates as a technology, service, and finance company worldwide”. (Business Description from Yahoo Finance)
7 reasons GE is a good buy in $15 - $16 range
(click chart to enlarge)

  1. GE has had good technical support in the $15 - $16 range in the last year (See Chart)
  2. General Electric provides a generous yield of 3.8% and it has raised its dividend 50% in the past two years. GE seems committed to use its increasing cash flow to get it dividend back to its pre-crisis level over time.
  3. Long term, GE’s aviation and healthcare divisions are well positioned to take advantage of the faster growth in the developing world.
  4. GE has met or beat earnings estimates for twelve straight quarters and is selling for just 11.5 times this year’s expected EPS.
  5. It has a five-year projected PEG of under .8 which is 45% under its five-year average.
  6. General Electric has an AA+ rated balance sheet and is projected to grow its earnings at a 14% annual clip over the next three years.
  7. GE is selling way under analysts’ price targets. S&P has a price target on GE of $24 a share, Credit Suisse is at $22. The median analysts’ price target on General Electric is $20.

    Disclosure: I am long GE.