|New Threads Only:|
|New Threads & Replies:|
Forum List » Value Ideas and Strategies|
Share and discuss value investing ideas and investing strategies.
GE – A Stock to Watch
Posted by: Muhammad Bazil (IP Logged)
Date: July 10, 2012 10:08AM
General Electric (GE) is certainly a stock to watch judging by recent developments relating to this Dow dividend stock. It has outperformed the S&P as well as the Dow Jones Industrial Average. That is since the onslaught of the June lows this year. Specifically from June 4 to date (July 8, 2012) it has recorded a 12.01% performance upswing, while the S&P 500 as well as the Dow 30 have both managed to perform lower at 6.99% and 6.57%, respectively, during the same period.
So what is attracting buyers to GE stock? Well, the fact is GE Capital, a subsidiary of General Electric, has been given the go-ahead by the Federal Reserve to make $475 million dividend payments on a quarterly basis to GE. In addition to this, GE Capital also plans to make a special dividend payment to the tune of $4.5 billion to GE in 2012.
GE in its first-quarter earnings statement has proclaimed that it wants to give back excess cash it has received from this subsidiary to shareholders. Currently, GE’s quarterly dividend has increased to $0.17 having dropped to $0.10 in 2009. Presently, this makes it one of the top companies to beat in dividend yield within the Dow 30 stocks.
It doesn’t end here, however. There are other reasons why watching this stock and eventually buying some will not be a bad idea. For instance, GE’s business property lending division has been sold to Everbank (EVER) for more than $2.5 billion, in order to reduce the company’s property portfolio. Also, the current price at which GE can be bought exceeds 13 times its earnings; a departure from what was the case some 12 months ago when its price was nearly 15 times earnings. Other financial or market indices that portray this stock in good light relate to the fact that its 3.3% dividend yield is presently more than twice the industry’s average, with the 2012 growth rate nearly five times that of the industry’s average.
Also, General Electric is making several promising strides worldwide in a very important industry, healthcare, so as to place itself in an incomparable position in different markets. The healthcare sector is of value because there is an increasing necessity for it, and rightly so. In several nations of the world it is almost recession-proof. Not long ago, GE renewed its alliance with SERV (Service Source International Inc.) so as to improve its renewal as well as sales efforts regarding its contracts for medical equipment with different vendors, including hospitals.
In addition, GE is making use of ServiceSource’s (SREV) sales plus cloud services know-how to create its own market share, as well as earnings in Asia. This alliance will in the long run lead to better recurring contract retention for it, concerning large as well as medium-sized medical equipment.
In addition, GE is working on an initial agreement with CCM or Concord Medical Services Holdings (CCM) regarding making use of CCM’s innovation center. There is also the partnership it has with Microsoft (MSFT). This is to form a joint venture that will help develop systems, plus intelligent tools via technologies, so as to enhance the economics as well as the management of healthcare for both patients as well as practitioners worldwide.
Furthermore, GE has many noteworthy ventures that look promising in the energy market sector throughout the world. It has an increasing presence in countries like Sweden, where GE’s turbine products are being used for several projects. Triventus, for instance, will be making use of 10 of these turbines to provide power to a wind-farm that will be generating renewable electricity to serve approximately 7,500 Swedish homes. This wind-farm project will be providing commercial service in the second quarter of 2013.
It is equally important to mention now two innovative technologies by GE, which will have impact on water recovery methods as well as energy efficiency. The first is its AquaSel NBTC technology, which will enable more than 99% of water to be recovered during bottling or industrial operations, while the other is GE’s recent IPER system, which will help in reducing energy demands to nothing less than 10% in big desalination pumping plants.
The bottom line here is that the developments mentioned above will most likely place GE in a better position financially as more of its products receive patronage both within the U.S. and outside. Therefore, follow GE stock closely with your ears close to the ground for up-to-date information.
Stocks Discussed: GE, SREV, MSFT,