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Why You Should Plug Into General Electric

Management is executing on both its global growth strategies and productivity initiatives by reducing costs. Equally and perhaps more importantly, GE is no longer reliant on its weak GE Capital finance unit. And when you factor in the confidence shown in management's guidance, which calls for 10% growth in industrial profits, this is a company that is operating on all cylinders.

At this point, it's foolish to continue betting against GE. There is nothing boring about being consistently profitable. If this company can grow its revenue at a long-term rate of 4 to 5%, these shares should reach the low $30s in the next 12 to 18 months. This is also assuming a return to the low teens in free cash flow margins.

Factoring in the strong improvements in management's transition to an industrial focus, General Electric, which pays a yield of 3.4%, will also improve its ability to return capital to shareholders. At around $26 per share, GE is one of the few conglomerate bargains that are left. And CEO Immelt should be left alone to continue what he's started.

At the time of publication, the author held no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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