If you agree that technical analysis can provide clues about a stock and company, then GE's chart is saying the company is stronger today, than it was six months ago.For the above reason and others, I'm Reiterating my Buy rating for General Electric (NYSE: GE), first recommended on June 2, 2009 at a price of $13.80. If you bought GE then, you're up about 20%.
Industrial giant GE, a microcosm of the U.S. economy, appears to have turned the corner. True, risk remains if an increase in loan default rates creates more hic-cups at the recently bolstered GE Capital Finance, but the calculation here is that the worst is behind GE Capital and the company's strong, diverse business lines will more than offset the finance division's short-term negative contributions.
Further, technically, GE's chart is in a healthy uptrend, with constructive minor pull-backs; moreover, recently prints suggest the chart forming a pennant - another bullish pattern.
Short-term, GE's stock is slightly overbought, so more-cautious investors should wait for a pull-back to about $15; but keep in mind that GE may not retreat to that level. The First Call FY2009/FY2010 EPS estimates for GE are 98 cents to 91 cents.
Stock Analysis: General Electric is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in GE now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your GE position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $9.25.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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