GE Aerospace (GE)

(A Top Pick May 4/15. Up 18.14%.) This has effectively transformed itself by spinning off their financial assets and its real estate. It has a good dividend. As the US economy and global operations in Europe continues to recover, there is more upside here.

(A Top Pick Oct 1/15. Up 20.65%.) This was coming to the end of the transformation that Jack Welsh had done of making it a financial stock instead of an industrial stock. It has pulled off a little in the short term, which gives you an opportunity. This has become a big player in energy infrastructure type stuff, which is why it has been coming off a little. Dividend yield of 3.1%.

(Top Pick Oct 26/15, Up 1.46%) He still likes it. He is there for the yield. Clinton will come out with a $trillion infrastructure spending and he is there for the infrastructure play. They have the best quality assets in terms of alternative energy. Short term there is pressure to go to $26.80. Buy it there if you want to buy it.

Doesn’t follow this one, however along the lines of Johnson & Johnson and Honeywell, you are probably not going to go bankrupt owning them. They are getting out of their financials and back to being a pure industrial, which he likes. 3.1% dividend yield. Not a bad company.

The US$ rising would be a negative for this company as it is a true global multinational. Overall it is a great company with good management. They have seeded and got a whole new group working in Silicon Valley, so the company has changed culturally. Have become a much more dynamic company, as well as moving out of the suburbs.

GE-N gets way too much love for what it has done. Earnings and cash flow per share are down and revenue is up only 7% over 15 years. Other companies went through ’08 too. This is the ultimate show-me stock. They are no longer regulated as a financial institution, but he still feels it has to show him.

It is a leader. They are a dividend payer and they have been spinning off parts of their business that are non-core. They are reducing debt and focusing on what they do best. They are trading at a very inexpensive PE. They are growing through cost cutting and sales as well as doing what they do well.

This has been in the doldrums for quite a while, but that is because it is trading hard up against its own FMV, which really hasn’t been going anywhere for some time. This is a company that is worth an awful lot more dead than alive. If somebody would take over that company and split it into its constituent pieces, he feels you would see an enormous amount of value released into the market.

(Market Call Minute.) He loves this. They have done a great job of divesting assets, and the Alstom acquisition is accretive.

Pays a good dividend of 3%, and they like to increase it. The company is very different than what he had bought into. It is very difficult to understand the corporation going forward. He has a Sell target of $35+. If it happens in November or December, he likely won’t sell until next year, so that he can defer taxes.

(Market Call Minute.) Moving away from GE Capital, and thinks that most of the transitions happen. Looks like 90% is manufacturing and GE Capital only contributes 10%. If you can kind of get there in 2017-2018, he thinks the business dynamics will change a lot and you should have better visibility.

GE Capital is down to about $140 billion in assets, and have a pretty significant leverage in the business. Thinks we will find out more in the next few months, as he believes the company is having a meeting with bond rating agencies to talk about GE Capital. Getting into the core industrial GE, he doesn’t understand what they are doing. They bought a bunch of energy equipment companies at the peak of the cycle. They also bought a bunch of 3-D printing companies recently and he doesn’t know what to make of that. He puts this one on the “too hard” pile.

Feels this is fairly valued. Got a very high multiple when GE Capital was part of the mix, which is what drove GE for many, many years, and now it is a pure industrial company. Feels the businesses they have moved into are less stable including a lot of the oil/gas businesses. The stability of their earnings is a lot more cyclical now.

(A Top Pick Aug 31/15. Up 24.28%.) This company has reinvented itself. They have moved a big part of their business into service. The servicing part means they are going to get fees and contracts. He really likes the outlook and thinks it could go significantly higher.

He likes this and the fact that they have undone all the financial things. It is no longer a financial company, which is good. That puts it outside of the federal regulations. The multiple accorded to industrial companies is higher than financials. They are doing some good things to grow the company. What is hurting them short term is a fairly substantial exposure to the energy sector through the equipment they manufacture for them.