Other ventures
In addition to these six segments, GE is in a partnership with Comcast Corporation (NASDAQ:CMCSA) called NBC Universal, LLC, which pooled NBC Universal’s assets with Comcast Corporation (NASDAQ:CMCSA)’s cable networks and regional sports networks. This venture is owned 51% by Comcast and 49% by GE. So, add Comcast to the “diversification” list you would need to buy.
I would avoid Comcast Corporation (NASDAQ:CMCSA) as an individual investment right now, especially with the mounting competition from satellite TV as well as the newer TV offerings from Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) which are gaining in popularity at a rapid pace.
Valuation and competition
For its growth potential, GE actually trades at a relatively cheap valuation of 14.4 times forward earnings. Consensus estimates call for forward growth of over 10% for the next few years, which justifies the P/E ratio and then some. General Electric Company (NYSE:GE) is also a very good dividend payer with a 3.2% yield currently. They have raised the payout every year since the financial crisis, and I wholeheartedly expect this trend to continue in the future.
As far as competition goes, it is difficult to call any other company a “direct” competitor due to the diverse nature of GE’s businesses, however one that comes close is 3M Co (NYSE:MMM)
3M Co (NYSE:MMM) is a similarly diversified company with operations in transportation, healthcare, safety, security services, electronics, communications, and more. One major difference is that 3M Co (NYSE:MMM) does not have significant exposure to the financial sector, and as a result, the company did not get hit very hard by the market crash a few years ago.
For comparison’s sake, 3M Co (NYSE:MMM) trades at 15.5 times forward earnings, but only has a 6% forward growth rate. GE trades at a discount, mostly due to its ongoing restructuring of its financial division. I believe that when the bad loans are completely worked out of the balance sheet, GE Capital will be a very profitable business once again.
The bottom line
To sum it up, as far as diversification goes, it’s difficult to beat GE. An investment in the company gives you exposure to so many sectors, leaving you with much more capital to invest elsewhere. General Electric Company (NYSE:GE) should provide both income growth and capital appreciation for years to come, thanks to its status as a leader in so many different areas.
The article Like Buying Many Stocks in One! originally appeared on Fool.com and is written by Matthew Frankel.
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