General Electric: Show Me The Way

WG Investment Research profile picture
WG Investment Research


  • Four companies are showing General Electric's management team what they need to do to create value in 2018/2019.
  • After considering the risks, I believe General Electric is still worth a look.
  • I'm staying long General Electric.

General Electric (NYSE:GE) is a company in turmoil, as this once-great industrial conglomerate has had to fend off the bears while at the same time try to reassure investors that the boat is not sinking. To say that the bears have been winning the fight over the last few years would be the understatement of the year because GE shares have underperformed the S&P 500 by a wide margin over this period of time. Consider this - GE shares have underperformed the broader market by ~160 percentage points over the last 10 years.

ChartGE data by YCharts

As a long-term GE shareholder, this chart hurts (more on this below). It has been hard to stay the course with GE over the last 12 months (full disclosure: I sold one-third of my position last month for around $15.50 per share), but I continue to believe that there are reasons to stay long the stock in 2018.

The most significant catalysts for this stock, in my opinion, all revolve around the value that could be unlocked by management by streamlining operations, focusing on the core businesses, and winning over the market (i.e., improving investor sentiment). Yes, easier said than done. However, I believe that there are four companies that are showing GE's management team what needs to be done in order for this storied conglomerate to finally turn the page.

Show Me The Way

Mr. John Flannery, CEO, already announced plans to dispose of $20B in assets over the next few years, but I believe that this company will need to make a bigger splash. Why? Simply put, GE in its current state is too complex to manage.

Several companies already have provided GE with a framework that should allow for Mr. Flannery and team to change the narrative for this industrial conglomerate. The

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This article was written by

WG Investment Research profile picture
Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long GE, UTX, HON. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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