Saturday, January 15, 2011

"GE: This isn't your daddy's old General Electric. This General Electric is rapidly transitioning to become a powerhouse again"

Dow Jones Industrial Average  11787.38  (UP) Week ending 01-14-2011

Sometimes things are right in front of our face and we can't see them. General Electric (Symbol GE, $18.82) under the guidance of Jack Welch from 1981 to 2001 was the largest sales company in the world. Welch joined General Electric in 1960. He worked as a junior chemical engineer in Pittsfield , Massachusetts, at a salary of $10,500 annually.  Later as CEO of GE, he had many successful tenants. He streamlined GE and created shareholder value. He wanted to be growing "fast in a slow-growth economy". His model design to do this was to be number one in market share in every division that GE conducted business in. He also had very good managers, but reduced the number of layers of management. 

Then after Jack left in 2001 the stock dropped down, then mildly rallied until January 2008 when the company stock price then dropped from $40.00 down to $7.60 in 2009, losing more than 75% of it's value and billions in market capitalization. Now it is two years later and GE has been rapidly making changes to the configuration of the company.  The time to buy the stock is now.

GE pays a 3.00% dividend , so it beats your money market right off the bat. Earnings for 2010 are looking like $1.12 per share and for 2011 , $1.29 per share. Improvements in Sales Revenue, EBITA , and rapidly improving Net Income from Operations should carry this this stock upward.

I am back in as a holder of the stock. I had owned GE and Cummins Inc. (Symbol CMI) back at the lows and then sold them at a decent profit. Cummins, of course took off into the stratosphere shooting up to $112.00,  while GE just lumbered along at a low price.

So if you are worried about market volatility, this may be a good 1-3 year investment for you that you don't have to worry about selling for a while. I am actually surprised that Warren Buffett and Charlie Munger have not got their calculators out on this one.  (the train picture made me think of them). These are certainly understandable businesses.

P.S.  JON C. OGG , at  24/7 WallStreet  list GE as their top conglomerate pick for 2011.

So add some "Good Things to your life" , and pick up some GE at $18 and change.


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