GE Aerospace (GE)

Had never liked this because GE Capital masked a lot of the other returns, so the stock used to trade at a huge multiple because of their so-called stable earnings. It was a massive finance company that could manipulate the earnings. In 2008, it became unstable. They have a new CEO who has to 1) take a lot of costs out, 2) sell a lot of businesses and 3) cut the dividend. They’ll be having their investor day very soon, and thinks they should cut the dividend. Probably a great buy between $15 and $20.

He would stay away from this at this time. Think of it as the Titanic trying to turn like a speedboat. A mega company that is making major, major changes, especially in terms of selling assets and acquiring businesses. A couple of years ago, they sold off $70 billion of their GE capital assets. That allowed them to give up their banking charter and lower their capital requirements. Throughout all this, they did the largest acquisition in history, which they are still trying to digest. There are a lot of integration risks.

A concern he has is the potential of a dividend cut in November. Most analysts are encouraging them to cut the dividend to help right side the ship. There is a lot of value in a company like this if they can turn it around. They started to turn the company around about 6 months ago, and doesn't think you are going to see much until Q4 of 2018. He would recommend buying half around the dividend cut. Being a tax loss candidate at the end of the year, Buy your 2nd half in late December, post tax loss selling, or early next year as you get more clarity. It sets up for a nice trade. Dividend yield of about 4.8%.

Used to be a bellwether stocks; as went General Electric, so goes the market. It has moved away from that. He likes that there is a spot in 2015 that we are pretty close to right now. This is coming back to a long-term trend. If it drops 2%-3% below, it is probably going to revisit some lower number. Bottom fishing is only good if you've got someplace to hang your hat. A good risk/reward.

It’s amazing how much good publicity Jeffrey Immelt got. The stock performance under his tenure was just terrible. He is gone now, and it looks like the new guy just wants to clean house. The debt was put on credit watch this past week, meaning that even the bonds are coming under pressure. It might be a little early to get into this. He would like to see something good come out of the company before he bought the stock.

This could follow a similar pattern of Walmart, the worst performing stock on the Dow, but has been a home run since. Has a new CEO in place, who is doing what most CEOs are doing, trying to clean up the mess they inherited, selling off non-core businesses and trying to repair the balance sheet. Thinks this is going to be significantly higher in value 3 or 4 years from what it is today. Dividend yield of 4.4%, which he is comfortable with.

He would hold it until the team turns it around. The action in the market is such that they laid out a plan to go forward. They have two sectors that are not good and he thinks they have a plan for that. The turbine business was also disappointing. He is going to give them some breathing room rather than sell into this. He will watch over the next weeks and months.

The stock went down on the open, but then rallied back. His rule is that if values go down and then can rally back, it usually means Shorts are covering. The question going forward then is, did we close at a higher price than yesterday or is the closing price high enough to indicate new buyers coming in. He wanted this to close above $24, but it didn’t, so it looks like the downward trend will continue.

(A Top Pick Aug 29/16. Down 23%.) They are going to report earnings this week, and if it went through his EBV+3 at $20.66 he would be buying more. They did the hard work of removing a totally inept CEO. The stock has gone nowhere in 17 years. Hopes this is a big turnaround. Flannery is the new CEO and gets to have the third-quarter report, and we’ll see what happens.

This has lagged the market and its industrial peers. They have gone through a lot of change, getting out of their financial services in order to grow their industrial segment. Have a new CEO and there will be a new CFO coming in. Earnings target for next year was set by the previous CEO, but that is probably not going to be made and the stock has been coming up. The dividend yield is over 4%. Even high quality industrial companies tend to have a yield of around 2.5%, so the company may reset the dividend.

Buy or Value Trap?He is going to have to go with a Value Trap. The stock just broke below its all-time low going back to January 2015. He would rather come back and buy it at $28 after it has moved up.

Revenues in the last quarter were up 2%. Industrial profits grew by 4%. A better player in this game would be Siemens (SIEGY-OTC).

An interesting company. Selling off the finance side out of the last recession has clearly focused them on healthcare, infrastructure technology and energy. He is not constructive on this company yet, in terms of a conglomerate being in all sectors. You are better off picking and choosing specific companies for those sectors.

(Market Call Minute.) Changing CEOs, which is a good thing. He wouldn’t touch this yet. The first thing that happens when a new CEO comes on is that they throw everything out, plus the kitchen sink.

This has a 4% yield, and any time a normal equity gets up into that high yielding category, people want to ask questions, especially when the fundamentals are coming under pressure. They went through a portfolio rationalization and really turned the ship around. Sold off a bunch of businesses and focused in on some of the core parts. Where do they go from here? He doesn’t see any strong drivers to get this going. There are greener pastures than this one.