General Electric Looking Relatively Cheap
NEW YORK (
) --
General Electric's
(GE) - Get Report
stock has lagged some its peers of late, suggesting there may be a short-term buying opportunity at current prices.
Over the past month, General Electric shares have underperformed the
S&P 500
(SPX.X)
index, as well as the
Financial Select Sector SPDR
(XLF) - Get Report
, a widely-followed exchange-traded fund that tracks financial companies. General Electric shares have also trailed the
Industrial Select Sector SPDR
(XLI) - Get Report
, an ETF that tracks industrial companies.
Typically, when this has happened in recent months, analysts have issued upgrades or raised estimates, or else argued that General Electric will jump ahead of one of its many scheduled investor updates.
In terms of valuation, General Electric is among the cheapest of the industrial companies, according to Deutsche Bank research. It trades at 16.3 times 2010 estimates, 13% below its historical multiple of 18.7 over the past 10 years. By contrast, the median industrial company among 16 analyzed by Deutsche Bank trades at a multiple of six percent above its historical average over the past 10 years.
Real estate offers another reason for optimism about General Electric. The company has a significant portfolio of properties, and at times in recent months has benefited from rallies in real estate stocks. The
Dow Jones US Real Estate index
(DJUSRE)
hit a new 52-week high on Monday.
General Electric may still be too unwieldy and confusing for many investors, but having steered through the worst of the crisis intact, it would seem any drastic surprises are unlikely at this point. So despite being up more than 7% so far this year, GE shares appear set up for slight outperformance in the coming weeks.
--
Written by Dan Freed in New York
.
