GE Aerospace (GE)

Nice dividend at 3.4%, which should grow by about 4%-5% on a yearly basis. Trading at about 19X forward earnings, with a decent growth rate in the high single digit/low double-digit. Valuations are getting a bit stretched, but technically it is breaking out a little bit and is above the 50 day moving average.

For the 1^st time in 25 years he is positive on this company, and only because they are divesting GE Capital. It could easily double if they just got rid of GE Capital. His model price is $21.14, a -22%. Paying a 3.4% dividend.

(Market Call Minute) Prefers HON-N, as it is the company that GE-N wants to be.

This is part of the industrial sector and historically its period of seasonal strength is from around the middle of October right through until the end of April. The stock is now starting to roll over. Technically the trend is still on the upside, but the strength relative to the market is slightly negative and looks like it is moving below its 20 day moving average as well.

Covers the world. Management has refocused their efforts and got out of several lines. They really cleaned up their act. They are THE industrial play in the world. They have good technology.

He does not think it will go up a lot. They are getting out of GE capital. It is back to its roots as an industrial company. He thinks you will get increasing dividends and share buybacks. It is not a bad story, but he does not see it trading at huge multiples like it used to.

Have decided to scale down about 40%, to less than 10%, on their financial services side over the next few years. Stock popped on that news. Hadn’t own this in the past because financial services was such a large component. They are going to do a significant buyback on shares with the proceeds. She prefers some other industrial names.

He does not look at the headlines before looking at valuation. He sees a potential to earn $5-6 per share. They have rising free cash flow. He feels the headline risk is already priced in. He will continue to buy it.

Sold his holdings about a year ago. They recently made a huge announcement in terms of selling off the assets of GE Capital. This had been a problem through the 2008 time period because it was a financial hiding out as an industrial. The selloff is going to hurt earnings because GE Capital is a big contributor to earnings. They are offsetting that in large part with a huge buyback.

This company is going to do what the market does. It is a very diversified company, but it is not a defensive stock. If the economy turns down, this company will turn down as well. In 2014-2015, the stock really hasn’t gone anywhere. It has been in a trading range. This is the period when industrials tend to be weaker.

It was a play on large cap industrial and it did well. Then it did not do a lot. They are breaking up the company and selling off the real estate assets, for example. He would buy the story. There is a dividend and you will probably get special dividends. The company is excellent.

(A Top Pick May 2/14. Up 5.22%.) Moved up over $28 on the news on their financial side, which is what he thought would happen. They have basically said they are giving back $90 billion back to shareholders over the next 3 years. He is going to hold it because he thinks it is worth $32-$33.

(Top Pick Apr 16/14, Up 8.39%) They had two areas that did not perform. Merchant banking and oil. The other divisions were quite good. He has not sold any. It has plenty of upside. They look very interesting going forward. It has a reasonable yield.

Have proposed selling GE Capital, which is a transformative thing for them. They are going to largely get out of financial services and become a purely industrial company. Have said they will be doing a huge share buyback. Believes they are going to increase the dividends again on a regular basis. Also, make transformative acquisitions in the industrial space. Thinks that all of this will lead to a much higher stock price.

Have been trying to move to become more of an industrial focused business. They are doing this by divesting their GE Capital business. Recently sold a huge chunk of it and are almost completely out of it. He is not convinced that this is the time to buy this. His primary concern is the acquisition they did last year, where they spent $17 billion on an engineering company. 3.3% dividend yield.