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Obama Pick: Buy GE as Obama brings good things to life

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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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Last updated: November 23, 2009: 10:49 PM

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