"We're going to revisit a stock we've traded in the past: General Electric (NYSE: GE)," says growth & Income expert Mark Skousen.
In his specialty yield-oriented advisory service -- High Income Alert -- he asks, "Why buy a stock scraping the bottom?" Here, the leading advisor offers four reasons behind this new recommendation.
"GE, of course, is a global leader in appliances, aviation, healthcare, transportation, energy, water technologies, cable, film, consumer electronics, lighting, electrical distribution and finance.
"The U.S. economy is in the dumpster right now, so it's no surprise to find GE there, too. From a high of more than $40 a little more than a year ago, GE trades near its 52-week low today. And we see four good reasons to buy.
"Number one, there is no stock in the United States that better represents the national economy -- and stock market -- than GE. As the U.S. economy recovers, GE will participate. (And, remember, the market recovers long before the economy does.)
"Two, when institutional money comes back into the market, it buys the biggest, most liquid companies first. GE fits the bill. It is a natural target for big money, especially the powerful, new sovereign wealth funds.
"Three, this stock is dirt cheap. I realize there are problems in the company's financial services division. But come on, GE now is selling for six times earnings, two-thirds of sales, and at book value. Don't tell me GE isn't worth a lot more than its (understated) liquidation value.
"Four, our advisory service is about high yields and GE has the highest in the Dow Jones Industrial Average. Based on the December dividend, GE is yielding 10.2%. This is the ultimate dog of the Dow!
"Bear in mind, the dividend may be cut in upcoming quarters. But even if the dividend is halved, the yield still is attractive. And the capital gains potential from here is exceptional."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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Reader Comments (Page 1 of 1)
2-17-2009 @ 1:09PM
Marie said...
GE stock may be "dirt cheap" but Immelt has managed to take a stock that was over 40 bucks a share to slightly over 10 in a very short time. Look at the car manufacturers...all of them are less than 5 bucks a share. GE, with Immelt at the helm has plenty of room to continue going down. Besides, Immelt is a creep.
2-17-2009 @ 6:57PM
mbishton said...
here's 4 more:
1] You can't see the forest for the trees.
2] You think that GE isn't a bank.
3] You can't hear the panic in the voices of CNBC's talking heads
4] When you look are around and sniff, its dark & stinky
2-24-2009 @ 12:38PM
jerry h smith said...
every day ge stock continues to drop. what is going on with their board of directors??? why do'nt investors want a stock that pays a dividen??? how does ceo keep his job?? he does not care about stock holders he can not run ge he needs to go!!!!!!!!
3-14-2009 @ 12:51AM
ValueHuntr said...
I agree with the author. GE is dirt cheap now. See detailed analysis at www.valuehuntr.com