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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