Diverse stock #3: General Electric
There are a few monsters that nobody wants to confront. General Electric Company (NYSE:GE) is one of them. The recent economic slowdown put some pressure over its management and finances. Nonetheless, the firm has escaped its bad fortune, and is currently on an upward path. Let us analyze GE’s fundamentals to unmask its growth potential.
The last recession sunk its stock price, from $44 to $8.50, a true shareholder’s nightmare. The stock has entered a new cycle, giving investors a new chance to cash some bucks. As the airplane industry picks up, General Electric Company (NYSE:GE) will reap benefits from engine building. Also, management has done away with many of the firm’s inefficient branches. Such approach has allowed the company to set an upward trend on all financial indicators. Last, focusing on renewable energies is already giving the company an edge over competitors as consumer tendencies change.
General Electric Company (NYSE:GE) has a proven management. Many argue that it did not foresee the recession, gravely hurting those who owned a piece of the pie. Although the recession could not be foretold, management has been quick to react and recover.
Yes, the stock price fell apart and no dividend was paid; nevertheless, revenue and cash flow levels were sustained, and debt was reduced. General Electric Company (NYSE:GE) could not get rid off its Capital Services branch, which is still in need of more fine-tuning, but the financial uptrend is helping this sector.
Currently, General Electric Company (NYSE:GE) stock trades at $23 with a forward P/E of 12 times, making it a cheap stock. Also, analysts remain positive about the firm’s earnings and revenue estimates. Given its proactive management, aerospace and energy industries’ expansion, and cheap valuation, it is recommended as a buy.
Bottom line
Well, size will give an important leverage over the market. However, size alone will be of no use. Hence, the stocks here analyzed possess both, size and diversity. They are present in many different industries and are conducted by capable managements. Consequently, the choice between one and the other depends on stock price, and dividends.
General Electric Company (NYSE:GE) pays the smallest dividend, yet holding the most room for growth. United Technologies Corporation (NYSE:UTX) is the most expensive but offers the highest dividend. Meanwhile, Honeywell International Inc. (NYSE:HON) is in a middle position and is recommended as the best buy since its history is solid and future also looks bright.
The article 3 Diverse Stocks for Your Portfolio originally appeared on Fool.com and is written by Damian Illia.
Damian Illia has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company. Damian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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