Time to Salute General Electric?

NEW YORK (TheStreet) -- I know you've all heard the motto "What's good for the Generals is good for America." For many years that was true. A portfolio of the Generals -- General Electric (GE), General Mills (GIS), General Dynamics (GD) and General Motors (GM) pretty well covered the entire U.S. economy.

General Electric is still the largest U.S. conglomerate. Although lately the stock price has faltered a bit it still warrants a look. During the past month the stock fell about 1% as this hourly trading chart provided by Barchart shows:

But over the last six months while the market as measured by the Value Line Index is down about 3% while General Electric is up over 4%:

General Electric operates in six main divisions: energy and infrastructure, including equipment for wind turbines, gas and oil production and nuclear power; aviation parts and systems; health care, including medical devices manufacturing and disease and drug research; transportation, providing drive technology to many industries; home and business solutions, providing appliances, lighting and plant automations; and financial services through its GE Capital unit.

The company was founded in 1892 and is headquartered in Fairfield, Conn.

Barchart technical indicators:
  • 24% Barchart technical buy signal
  • Trend Spotter buy signal
  • Although below its 20 day moving average it is above its 50 and 100 day moving average
  • 1.30% off its monthly high, 6.00% off its 1 year high but up from its 1 year low by 40.10%
  • Relative Strength Index 50.40%
  • Barchart computes a technical support level at 19.49
  • Recently traded at 19.73 with a 50 day moving average of 19.45
  • Fundamental factors:
  • The stock is widely followed on Wall Street where 13 brokerage firms assigned 16 analysts to follow the stock
  • Analysts project revenue will rise 1.80% this year and another 4.70% next year
  • Earnings are estimated to increase by 12.40% this year, an additional 12.30% next year and continue to increase by an annual rate of 12.63% for the next 5 years
  • Analysts think the stock should give investors an total annual rate of return of 16% to 22% over the next five years
  • These projections resulted in analysts publishing four strong buy, 10 buy, two hold and no underperform or sell recommendations
  • The company has a B++ financial strength rating
  • The P/E is 14.39 which is slightly lower than the market's P/E of 14.60
  • The dividend rate of 3.45% is about 45% of earnings and higher than the market's dividend rate of 2.40%
  • The company has a plan to divest or lessen its financial divisions and get back to industrial endeavors especially in the areas of energy production
  • Investor interest:
  • As mentioned before this is a widely followed stock on Wall Street and a long-term conservative core holding in most of the firms model portfolios
  • Goldman Sachs, Oppenheimer and Barclays Capital Management all have positive reports released
  • Although Jim Cramer is not high on the stock, Chris Davis and Tobin Smith made positive comments
  • The readers of TheStreet give the stock a B rating
  • Competition

    I always give the market the final vote and during the past year while GE is up about 6%, Siemens ( SI) is down 35%, United Technologies ( UTX) is down 15% and 3M ( MMM) is down about 4%:

    Siemens
  • TheStreet rating of C+
  • Revenue projected to decrease by 7.70% this year but increase by 4.20% next year
  • Earnings estimated to decrease by 28.40% this year and increase by 11.80% next year
  • Analysts projected annual total return 23% to 27%
  • United Technologies
  • TheStreet rating A-
  • Revenue projected to increase by 5.40% this year and 15.00% next year
  • Earnings estimated to increase by 3.00% this year and 21.22% next year
  • Analysts projected annual total return 14% to 18%
  • 3M
  • TheStreet rating A-
  • Revenue projected to increase by 5.90% this year and 6.37% next year
  • Earnings estimated to increase by 6.40% this year and 9.10% next year
  • Analysts projected total annual rate of return 14% to 18%
  • Conclusion: Personally I like to see a 10-10-10 projection: increase of 10% in sales, earning and total return.

    General Electric is such a large conglomerate that it's very difficult for revenue to increase by much better than the expansion of the worldwide economy.

    If you are a conservative investor who wants a large diversified company with better than average costs control you might want to consider GE. Please watch the moving averages and turtle channel to look for entry and exit points:

    This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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