Text size: Small font Default font Larger font

Have an account? Please log in.

TSI Network
Patrick McKeough is one of Canada’s top safe-money advisors. The Wall Street Journal, Forbes and The Hulbert Financial Digest have all recognized his ability to find stocks with hidden value. He is editor and publisher of The Successful Investor, Stock Pickers Digest, Wall Street Stock Forecaster and Canadian Wealth Advisor; inventor of the Quick Profit/Value System and the ValuVesting System™. A best-selling Canadian author, he wrote Riding the Bull, the book that predicted the 1990s stock-market boom.

Blue chip stocks: GE strives to sustain its recovery

May 1, 2012 -  Be the first to comment
Posted by: Pat McKeough Filed in: Blue Chip Stocks
  • Comments

Blue Chip Stocks: GE's Fairfield Campus image

The ability to weather a crisis is one of the distinguishing characteristics of the blue chip stocks we recommend. This multinational, one of the last survivors of the original 12 Dow Jones stocks of 1896, suffered a sharp setback during the financial crisis of 2008-2009. But its deep resources and diverse industrial base have allowed it to stage a recovery.

General Electric Co. (New York symbol GE; www.ge.com) is one of the world’s largest manufacturers. It makes equipment for generating and distributing electricity, such as turbines (31% of revenue, 32% of earnings); aircraft engines (13%, 17%); health care equipment, such as medical scanners (13%, 14%); home appliances and lighting (6%, 1%); and locomotives (3%, 4%).

Following the 2008/2009 financial crisis, the company scaled back the activities of its GE Capital subsidiary, which provides loans and other financial services to GE’s customers. This business now accounts for 34% of GE’s revenue and 32% of its earnings.

In 2011, GE merged its NBC Universal entertainment operations into a 49%-owned joint venture with Comcast Corp. (Nasdaq symbol CMCSA). Because GE owns less than 50% of this venture, it no longer consolidates its results with its overall revenue.

“What works in Canada is working in the U.S.” That’s what Mr. Peter Brimelow of Dow Jones MarketWatch recently wrote about Wall Street Stock Forecaster, one of a group of “remarkable Canadian newsletters” that have “assembled a long and very strong record.” The record, as compiled by the authoritative Hulbert Financial Digest, shows that the compound annual return of Wall Street Stock Forecaster has beaten the Wilshire 5000 Total Market Index by almost 30% over the past decade. You are not getting the full potential out of your investments if you do not include a selection of the best U.S. stocks in your portfolio. And the results show that Wall Street Stock Forecaster uncovers the American stocks with the greatest growth potential. As a new investor, you can get the first month FREE plus you will start profiting from our weekly hotline updates and recommendations immediately. Reply now. Click here.

Blue chip stocks: GE in line for dividend increase

The company is also using its rising earnings to expand its main industrial businesses. In 2011, it spent a total of $11.2 billion buying companies that make engines, pumps, valves and other machinery. These new businesses contributed $4.6 billion to GE’s 2011 revenue.

In the three months ended March 31, 2012, GE’s revenue fell 8.2%, to $35.2 billion from $38.3 billion a year earlier. However, if you adjust for the sale of NBC Universal in the year-earlier quarter, revenue rose 4.4%.


GE was one of the original Dow Jones stocks in 1896, has been a household name for many decades and captured even more publicity under celebrity CEO Jack Welch, author of “Winning.” Which of today’s stocks do you think will show the same resilience and still be around a century from now?
Click here

Earnings fell 4.3% in the quarter, to $3.3 billion from $3.4 billion. Earnings per share were unchanged at $0.31 on fewer shares outstanding. If you exclude a gain on the sale of NBC and other unusual items, earnings per share jumped 17.2%, to $0.34 from $0.29.

The debt is $11.7 billion, or a low 6% of GE’s market cap. The company should earn $1.45 a share in 2012. The stock trades at 13.1 times that estimate. GE’s improving outlook should also let it increase its $0.68 dividend, which yields 3.6%.

In the latest edition of Wall Street Stock Forecaster, we look at whether GE’s acquisitions will pay off. We also examine whether GE can sustain its recovery and keep its share price rising. We conclude with our clear buy-hold-sell advice on the stock.

You can get Wall Street Stock Forecaster, with our advice on leading U.S. stocks written especially for Canadian investors, along with “My #1 U.S. Stock Pick for 2012” as well as FREE access to our weekly Email/Telephone Hotlines when you subscribe now. And as a new subscriber you can save $50.00 on an introductory subscription. Click here to get started right away.

Be the first to comment

Permalink: http://www.tsinetwork.ca/?p=52876

All of our articles are available for republishing as long as you provide a link back to the original article.

Tags: , , , , , , ,

  • Comments

Would you like us to inform you when new articles are posted?

What do you think? Go ahead and add your comment.

Please be respectful with your comments and help us keep this an area that everyone can enjoy. If you believe a comment is abusive or otherwise violates our Terms of Use, please click here to report it to the administrator.

Twitter Facebook
Follow TSI Network on Twitter and Facebook!

TSI Network Products

In today's economy, it's more important than ever to have clear investment advice that is tailored to your own personal goals. This is where Pat McKeough's conservative safe-investing philosophy comes in. Through TSI Network, you get access to reports, monthly newsletters and premium services that go beyond the daily headlines to give you all the advice and information you need to build a portfolio with long-term growth potential. Simply click on the links below to discover which service is right for you.