General Electric Company (NYSE:GE) has the ability to expend billions of dollars in research to determine where its business units should focus in order to capitalize on limited market opportunities during the downturn. Wisely, the company opted to make expenditures to optimize fuel efficiency in its aviation division, efficiency equipment for delivery of electrical energy, optimization
equipment for the oil and gas industry and wastewater treatment technology. It energy solutions include is FlexEfficiency Combined Cycle power to power grids that assist utility companies in managing electricity demand. The company's technology helps to deliver up to a quarter of the world's electricity. Below, I will explain how General Electric Company (NYSE:GE)'s focus on electricity production will act as a long-term growth catalyst for its stock.
The Future Of Energy
According to the World Nuclear Association, the world will require a much larger energy supply in the next 20 years. Cleanly-generated electricity will lead this demand. Electricity demand is greatly outpacing overall energy use. Electricity demand is predicted to jump 67% from 2010 to 2035. Nuclear power provides nearly 13% of the world's electricity. Nuclear power provides 21% of electricity in "The organization for Economic Co-operation and Development" (OECD) countries.
General Electric Company (NYSE:GE) has secured a contract to supply turbo machinery equipment to Petrobras (NYSE:PZE) Argenta for deep water oil production. The equipment was chosen for efficiency, improved performance, emissions control and extended equipment life. The equipment is for floating production and offloading wells in Brazil. The equipment will take in technology from other GE business operations such as power conversion and power and water. GE's oil and gas division has produced the technology that fills trucks with compressed natural gas (CNG). At present, CNG is the only environmental option for large truck operators as electric, hybrid, and liquefied natural gas are still too costly. GE estimates that a truck fleet can save up to 40% in fuel costs and can cut greenhouse gas emissions by 30%. There are currently 15 million vehicles powered by CNG around the world. This is a big growth area for GE. The company's activity in power generation includes wastewater treatment technology that will be used at natural gas fueled combined cycle power plants in Texas. This will be beneficial for Texas as it has been experiencing a drought.
GE's reach extends globally to 140 countries. GE Capital has the ability to commit up to $120 billion to middle market companies, giving them the opportunity to expand and provide employment to communities across the globe. GE's work at home and abroad is aimed at building economies. In the energy sector, it is aimed at providing renewable and clean energy in the home and business markets as well as transportation. GE's jet engines, while running on fossil fuels, are aimed at reducing emissions, and using technological advances to cut fuel costs.
GE's record of reliability, performance, high quality materials and modularization will serve it well in its endeavors in energy and recycling technology. GE's numbers are not spectacular, but solid despite the current economic climate. It has a profit margin of 9.30% and is providing an 11.27% return on equity from all of its diversified businesses. Its quarterly revenue growth is positive at 2.80% and its quarterly earnings growth is 8.3%. Its estimated book value per share is $11.69.