GE Aerospace (GE)

(A Top Pick Dec 4/14. Up 24.6%.) This is doing so well because it is a different company than it was 5 and 10 years ago. It had become largely a financial company at exactly the wrong time. They have divested most of their financial and financial related assets and continued to buy industrial, health-care and energy type assets. He would still Buy the stock at this price.

They have been offloading finance assets so the stock has done quite well this year. You will get about 10% plus the dividend in return, but she would wait for a pullback to start nibbling on a position. They are buying back a huge amount of stock. She would like to see some organic growth from their industrial operations, however.

Hasn’t been a fan of this company. They finally evolved in the last 6 months, and are casting off GE Capital. His model price is $20.16, a negative 33%, but what will happen as they spinoff GE Capital, the balance sheet will look a whole lot different and it is going to be an industrial. This is a financial engineering play for him. Dividend yield of 3.06%.

They are down to core growth businesses. The growth may not pick up, but the balance sheet is in good shape. Probably single digit earnings growth. You can expect 5-10% growth plus dividend.

He likes this despite the currency headwinds. The company is finally changing back to an industrial from way too much exposure to financial services. They have been unwinding financial services for the last couple of years. You are going to see them continue to raise their dividend on a regular basis. Dividend yield of 3%.

It has broken out here in getting out of some of the financial services they were in. The resistance may be in the low to high $30s from ’08. He thinks their uptrend is based on their divestiture and not based on market trends.

This company has a lot of things going for it from the perspective of capital rationalization. Ultimately you will be left with something that is very representative of the US economy, which is not a bad thing right now. The chart looks fantastic and the capital actions have been born out. Dispositions have been really big stuff. He likes that as a prudent capital stewardship. This is also a stock that you can ride in an interest rate rally. Good tailwinds going into the new year. Just be mindful of what you are holding when all their dispositions are done.

Buy and Hold? This is a good name to put away for now. It has certainly turned the corner. They’ve had some tough times over a number of years, but in recent months they have done much better, partly because they have started to focus on their core business. Inexpensive valuation.

He would suggest hanging onto your GE-N shares if you are offered the financial spin off company’s shares instead. He prefers the industrial pure play nature of GE-N.

He owned this and then sold it on the back of a number of false starts, and wasn’t particularly enamoured with the Austin deal and what it would result in. Trades at a discount to the market, but for a reason. He would think of a number of other industrials before this one.

It is an industrial company with a catalyst. Over the next couple of years their divestiture will free up $80 to $90 Billion. It will remove a lot of regulation of what they can do with their capital. They can buy back shares. You are likely to get very good dividend growth.

This company seems to be on a pretty big tear of trying to get rid of any financial businesses. They seem to be more focused on the industrial businesses. He views this as a positive, where you are getting more of a pure play industrial company and none of the regulated financial services businesses.

GE-N has made it clear they are transitioning away from finance to industrial. The wild card is the integration of their largest acquisition. When you have two giants come together there are growing pains. He does not have enough clarity on which way it will go. He sees nothing specifically wrong with it, though.

He has hated this company for 10 years or more. It is one of the major transformations for one of the major companies in North America. It is a special situation. Upside is $31% lower than that of September 23’rd of this year. GE Capital`s balance sheet is so large it is weighing down the company. Put it away and in five years look at it again. When they take GE Capital off the balance sheet, his model price will skyrocket.

He is favourably disposed to it and almost made it a pick today. He likes the financial deconsolidation. You are going to get a re-rate in the industrial part of the company that will remain. They have been held back by some meaningful business in oil and gas. They have some weakness in their healthcare business. However, it can do well in this environment.