It’s official, I added another 1/8 of my holding in GE at $14 per share. The transaction occurred at 10:54 AM est. With a 2.77% yield, GE looks like a good long term buy and hold.
I believe GE is being knocked down by the more conservative approach to budgets that Europe is heading. Will this new, fiscally responsible attitude hurt GE? Probably in the short run, but in the long run, it will be very bullish for many large American companies operating in Europe.
Ford Equity Research has this to say about GE:
We project that GE will strongly outperform the market over the next 6 to 12 months. This projection is based on our analysis of three key factors that influence common stock performance: earnings strength, relative valuation, and recent price movement. We project that GE will strongly outperform the market over the next 6 to 12 months. Thisprojection is based on our analysis of three key factors that influence common stock performance:earnings strength, relative valuation, and recent price movement.
And here is a very bullish statement from Credit Suisse
The GE CEO gave an upbeat outlook at the EPG Conference, and appears confident the company is set to start growing earnings substantially. Fears over the demand outlook have clearly risen in recent weeks as regards Europe (GE’s exposure to European sovereign debt is low, and its EUR costs and sales are fairly matched) and China (GE highlighted that its exposure to ‘bubble’ areas in China such as real estate and thermal power generation equipment is small), but we believe that if we see industrial EPS momentum slowing somewhat in the next few months, GE should outperform its EE/MI peer group off the back of potential earnings surprise in GE Capital, where we think consensus estimates are still very low. The CEO stated that Capital is in the ‘midst of a strong earnings snapback’.
The Street is less Bullish on GE, here is their statement on GE:
The company’s strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally poor debt management and disappointing return on equity.
S&P rates GE [Four Stars out of Five Stars]
Our risk assessment reflects our view of GE’s long-term record of earnings, cash flow and dividends, which we attribute to good management of a diversified portfolio of profitable businesses, offset by recent financial market turmoil, which has caused GE to access the capital markets.