GE Aerospace (GE)

In 2001, their business was quite diverse. Since then they have gone back to their core competencies. Some of it had been forced because of the troubles that GE Capital had gotten into in 2008. Thinks they are starting to get it right but there is still a ways to go. There are other industrials with better growth metrics.

Technically this company is set up very well. Stock has just broken out of a very large consolidation to new highs. It is an industrial and is in a difficult space but specifically a big beneficiary from the growth in natural gas and potentially big growth in LNG. Will probably be a little better than market perform with less risk.

Has had a decent run. And incredibly well managed company. Doesn’t see a lot of upside at this point. Expect their financial services is going to soften up a little bit. Industrial businesses will have 2%-3% growth. Growing at 5% for a company this size is going to be difficult.

Good company. Reinventing itself. Going back to its industrial roots. Has been quietly restructuring. Not cheap. Will probably make $1.50-$1.60 this year. Yield of 3.27%. (See Top Picks.)

Likes this one. The financial services arm has improved. The core business of turbines, power generators is a great area to be in. Probably slowing down a little as infrastructure spending is slowing down. Fairly valued now. Single digit earnings grower so wouldn’t expect a big return off it. A safe stock. 3.25% dividend yield.

Resistance at $22. If you made profits on the stock he would be tempted to sell it. If it breaks that resistance, then he would be all over it.

(A Top Pick Aug 25/11. Up 41.56%.) Had thought it seemed to be in a turnaround mode and there was a good chance that they would increase the dividend, which they did. Has a target price of better than $35.

Has performed fairly well recently, partly because a lot of US industrials have rallied with the hopes of a stronger economic outlook. Also their finance business has been doing better. There are probably cheaper stocks to own.

Likes their business. Recovered on the consumer side. GE Capital might start paying a dividend soon. It would translate into GE-N dividend increase. Doing well with shale gas in US and globally. They are a global leader in gas turbines. Aerospace division is doing relatively well. A long-term hold.

Like many other industrials, this tends to move very closely to what the market is doing. Dividend is 3.2%, which is not bad. Trading at 13X forward earnings. Long-term growth is probably in the high single digit low double-digit area.

Although he doesn't own the equity, most of his clients own some form of GE fixed income instruments. Doesn't own it as an equity because as a diversified industrial company of this size, it is more and more difficult to find and access organic growth. Prefers Schneider Electric (?) out of France and 3M Co (MMM-N).