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For me, today is a day of great optimism. I'm immensely relieved that Obama was elected President and I expect great things from him. In fact, I think his win could increase optimism about the future of America enough to give the economy a much-needed boost. Years from now, historians may look back and see Obama's election as kicking off a new virtuous cycle where people feel more upbeat, so they buy a few more items, and businesses do a bit better and hire more and...
Okay, I'm getting ahead of myself here. But while pondering what stock I would buy as a play on the new Obama America, my pick would be General Electric Co. (NYSE: GE). GE has long been a play on global economic growth. It is a huge conglomerate with businesses in consumer finance, media, energy and household appliances -- just to name a few. Its returns pretty much track the S&P 500 or other broad market indexes over time (although with more volatility than the index).
Given recent months of financial crisis and worldwide economic slowdown, GE's stock is cheap. It is trading today around $20 a share, a 50% drop from a year ago. It's price-earnings ratio is just 10 and its yield is a hefty 6%.
Plus, it is building major businesses in a lot of industries that should benefit from an Obama presidency -- wind power and other sustainable energy sources, healthcare technologies, railways. Power generation, aviation and clean water technologies could increase in demand as global growth returns.
There are some potential near-term catalysts for GE -- it receives capital from the Treasury to help with its troubled finance unit. CEO Jeffrey Immelt recently said he would be cutting costs next year, which could lift earnings (and hopefully not cost too many jobs).
GE will never be a high-flying stock. But as my colleague Melly Alazraki recently noted when she picked GE as a Halloween treat, it has a triple-A rating. USA Today's Matt Krantz recently analyzed GE for a reader who was thinking of selling. He concludes this is not a good time to sell -- making some points that argue it is a buy.
GE doesn't use its slogan "We bring good things to life" anymore. But I think that Obama will bring good things to life for many Americans. And GE shareholders will be poised to benefit.
Disclosure: I'm not really going to buy GE or any other stocks today. But if I was going to buy a stock, GE would be it.
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Reader Comments (Page 1 of 1)
11-05-2008 @ 6:06PM
Iridium said...
You might want to buy GE stock. Obama owes GE big time for helping to run his campaign. GE owned NBC was the Barck Jesus Obama network that could say no wrong about the man.
GE putting an entire media conglomerate in his pocket is a pretty big favor to repay.
11-06-2008 @ 7:22AM
jwill said...
What will happen when obama doesn't save America, bring world peace and provide equality for all? Will you crucify him?
11-06-2008 @ 6:16PM
bill greene said...
Obama's win will definitely breed optimism-guaranteed! -- because the media will trumpet his every move as brilliant and positive. Such optimism, when spread around America's businesses and consumers, may be self-fulfilling, for a while.
Such trumped up optimism will certainly beat the doom and gloom the media has been spreading the last eight years to defame the current administration in Washington. However, smoke and mirrors don't change the long-term workings of the national economy or the national psyche. They just mask the on-going slide and national decline.
Sooner of later, the tax and spend, big government, centrist controls of the Liberal Left will destroy what's left of the American people's initiative and enterprise. When real people like Sarah Palin and Joe the Plumber are ridiculed and shunted aside, the long-term trend is clear--and scary.
There is a new elite in America and they don't know what they are doing. People like the Palins and Joe the Plumber built the country; the Michelle's and Pelosi's will drag it down. They will accelerate our gradual half-century long slide toward increased regulation and the loss of individual freedom and responsibility. No one seems able to stop that. But the next few years might be fun! Too bad I have kids and grandkids to worry about. Is anyone else thinking that far ahead ??
11-10-2008 @ 12:11PM
carl said...
When are you children ever learn to not comment on things of which you know nothing about. Bill you are an idiot....Sarah may have some smarts but Joe, I don't think so. So get over it. Your choice for president is in the toilet and you'll need a lot of plumbers to unplug you brains.