We recently compiled a list of the 10 Best Monopoly Stocks to Buy. In this article, we are going to take a look at where GE Aerospace (NYSE:GE) stands against the other monopoly stocks.
Morgan Stanley believes the bull market might not be finished, and the S&P 500 might close the year with single-digit gains. There can be further declines in the S&P 500, which can result in attractive entry points. Historically, when stocks decline 15%, the average returns after a year tend to be attractive, says Morgan Stanley. Furthermore, the returns are even more attractive when a 20% drop becomes an entry point. That being said, a major risk to the broader equity market can be a resurgence of inflation and the US Fed increasing rates, along with tariff impacts.
S&P 500 Can Deliver Single-Digit Returns
Morgan Stanley Investment Management’s Applied Equity Team believes that 2025 can be a “pause” year for the broader S&P 500, posting single-digit gains. This remains consistent with the firm’s outlook, which was shared at the beginning of the year, suggesting that 3rd year of a bull market tends to deliver mediocre—but positive returns, together with increased volatility. Analyzing 12 times since 1950 that the broader S&P 500 declined a minimum of 20% from its peak, there was a recession in 9 of such instances, says the investment firm. In the current instance, the combination of the market decline or the recession talk appeared to be sufficient to spur a policy response.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Pockets of Opportunities
Morgan Stanley believes that stocks can retest lows seen in early April. The base case outlook is for gains in 2025, and the market is open 251 days a year. If stocks decline 20% or more, the investment firm opines that investors will do well to consider increasing the equity allocations more aggressively. In the 12 times since 1950 in which the S&P 500 fell 20%, the average subsequent 1-year return with that fall as an entry point is 19%. Fidelity International believes that, in this market, which is characterised by increased uncertainty, a focus on dividends as a component of total return can offer support.
Furthermore, the firm believes that it is critical to combine an emphasis on high-quality businesses with valuation discipline in a bid to avoid overpaying for companies and have a better chance of generating strong long-term returns. In difficult market environments, earnings resilience remains critical. This doesn’t mean a top-down allocation to defensive industries, but selecting companies possessing resilient business models throughout a broad range of sectors with the help of detailed bottom-up analysis. Owning resilient businesses, diversified across industries, leads to increased earnings persistence as compared to the broader market indices, says Fidelity International.
Our Methodology
To list the 10 Best Monopoly Stocks to Buy, we scanned through monopoly ETFs and several online rankings. After getting an extensive list, we chose the ones that were the most popular among hedge funds. Finally, the stocks were arranged in ascending order of their hedge fund sentiment, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Wind turbines against a backdrop of the sky, signifying the power of renewable energy.
GE Aerospace (NYSE:GE)
Number of Hedge Fund Holders: 101
GE Aerospace (NYSE:GE) is a global aerospace propulsion, services, and systems leader. The company has been tagged as a dominant player in the broader aerospace industry, primarily in engine manufacturing, thanks to its historical leadership, strategic partnerships, and technological investments. The company’s healthy market position, mainly in narrowbody jets and aftermarket services, continues to bolster its market position. Sheila Kahyaoglu, an analyst from Jefferies, maintained a “Buy” rating on GE Aerospace (NYSE:GE)’s stock, and the associated price target remained same at $240.00.
The analyst’s rating is backed by GE Aerospace (NYSE:GE)’s healthy financial performance and strategic management decisions. It has exhibited resilience by maintaining its profit guidance for 2025. This was seen due to effective cost controls and price surcharges, demonstrating the company’s ability to navigate economic challenges. For FY 2025, the company expects low double-digit adjusted revenue growth, operating profit of $7.8 billion – $8.2 billion, adjusted EPS of $5.10 – $5.45, and FCF of $6.3 billion – $6.8 billion. GE Aerospace (NYSE:GE)’s backlog and growth in services continue to support the positive outlook. The company has a commercial services backlog of over $140 billion. It saw continued demand for its services and products. At Commercial Engines & Services (CES), it secured a significant engine commitment from ANA for over 75 LEAP engines to power their fleet of 13 Airbus A321neo and up to 22 Boeing 737 MAX aircraft.
Aristotle Atlantic Partners, LLC, an investment advisor, published its Q4 2024 investor letter. Here is what the fund said:
“GE Aerospace (NYSE:GE) designs and produces commercial and defense aircraft engines, integrated engine components, electric power, and mechanical aircraft systems. The industry has high entry barriers and is concentrated among few players. Despite its cyclical nature, the demand for travel is driven by global middle-class growth. Boeing and Airbus have long order books, ensuring steady demand for engines and spare parts. The company also benefits from high-margin services for existing aircraft fleets, with services accounting for 70% of its commercial engine business. GE Aerospace serves customers worldwide.
We see GE Aerospace making significant strides in its commercial engine business, which is expected to boost future services revenue growth. Over the past five years, the company has undergone substantial restructuring and simplification, including divesting its healthcare and energy businesses. The company now operates in three segments: Commercial Engines & Services (CES), Defense & Propulsion Technologies (DPT) and Insurance. Long-term revenue guidance is for high single-digit growth, and management has a goal of $10 billion in annual operating profit by 2028, with an expected 20% annual earnings growth. Following years of restructuring, we see GE Aerospace now positioned to return capital to shareholders through dividends and share repurchases.”
Overall GE ranks 4th on our list of the monopoly stocks to buy. While we acknowledge the potential of GE as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than GE but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
