"What's most important to me as a shareholder is that Immelt and the management team execute," MacDonald says. "If you listen to what Immelt laid out in the beginning of 2009, there was a focus on the company's core competencies. They would pay dividends, buy back stock, and be prudent with the cash they have and generate. It seems like they're doing a pretty good job of that."
As shareholders in GE, both MacDonald and Croft look at GE from two different perspectives. For MacDonald, he says investors may not realize that GE has always been a late-cycle business that will rebound a few quarters later than other companies. Now, investors are so skeptical and pessimistic, they're doubting there will be any pickup at all, he says. Even the industrial analysts are confused on GE, MacDonald adds.
"Industrial analysts look at the company, which is 30% to 40% financials, and they don't understand it and they're scared of it," MacDonald argues. "So everyone paints the whole thing with a negative brush. But the finance business is good and it's earning great returns at the moment. All of their competitors have gone away and they're writing business that has great returns."
Croft, on the other hand, looks at GE's valuation compared to peers like United Technologies and Honeywell (HON). Croft points out that GE trades at 12 times next year's expected earnings "with a very powerful balance sheet." That's compared to Honeywell and United Technology, which are 13 or 14 times earnings."GE is a leader in technology and manufacturing. It has a world-class set of businesses," Croft says. "They're in areas that are growing globally along with the economy. In that respect, it's a good long-term investment. It won't shoot up like a rocket. They have some issues they're working through. But that's why you can get it at about 12 times earnings versus some other industrial stocks. "And they have GE Capital, which has a lot of earnings power," Croft adds. -- Written by Robert Holmes in Boston.
>To contact the writer of this article, click here: Robert Holmes. >To follow Robert Holmes on Twitter, go to http://twitter.com/RobTheStreet. >To submit a news tip, send an email to: email@example.com.
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