May 10, 2014
Where is General Electric
On Dec 16, 2013, we advised accumulating GE at $27.22. We felt it was a very strong company with low risk. We still feel that way.
GE is a multifaceted company that is as Blue Chip as a company can get. It pays a decent dividend, it is well managed, and it has the clout to move on a massive capital base into any area. It is currently offering a binding offer to acquire Alstom SA’s energy businesses (thermal, renewable power, and grid assets) for an equity value of $16.9 billion.
If you wish an excellent long term investment, this is a good one.
Time to Move on From GE
GE is currently trading at $26.50, which is a reduction of $0.72 or 2.6%. Since there are so many other opportunities, we will accept this insignificant loss, and move on.
A Stock With a Strong Upside, and Very Low Risk
Cymorfund Stock Pick
We pick stocks that have significant upward potential. Many are potential 10 Baggers. Others have strong potential and are no brainers.
2013 was a great year for us. 2014 will be even better.
First Pick of 2014 General Electric GE $27.22 – a No Brainer
We love 10 Baggers, and often pick junior stock with tremendous upside. But sometimes, if a gain of 20%, 30%, or 40% is easily within reach in a short time, giving an annualized return of 50% or 100%, it is too profitable to pass up. The first pick of 2014 is such a situation.
When picking winners, sometimes you cannot ignore a gift. General Electric is such a gift. It is moving strongly up, and all you have to do is hang on for the ride.It is relatively impossible to dissect a company as large and as complicated as General Electric. When you read analysts’ reports, they attempt to dissect the company and report that this or that will make a huge difference. Unfortunately, most analysts report are notoriously inaccurate. Have a look at these charts showing the dismal accuracy of Wall Street forecasts.
General Electric is a buy based upon the strength of the company, and its dominant position in the American economy. There are two indicators that tell the tale currently.
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First, the USA economy is picking up steam and starting to expand at a significant rate. The new economic cycle is gathering strength, and those enormous USA multinationals will lead the charge, as always.
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Second, the technical charts tell the story. GE stock has been rising and is moving upward more rapidly. When the market moves down, GE still moves up.
Is the US Economy Roaring to Life?
When the US economy comes to life, the stock market takes off and the big guys lead the charge. All indications are that the US economy is coming to life. To quote Gluskin Sheff’s David Rosenberg January 2, 2014, 2014 Will Be The Year The US Economic Horse Breaks Out Of The Gate.
According to Business Insider January 2, 2014, Construction Spending Hits The Highest Levels Since March 2009.
Whether it is the dropping unemployment rate , or the record sales of autos, or the other indicators, the US economy is undeniably moving again.
We advised our readers repeatedly that the last economic cycle was finished, and the new bigger and greater economic cycle was starting.
There is no doubt that the US economy is re-asserting itself. For as long as records have been kept, economic cycles repeat themselves. A cycle starts slowly and with skeptics galore. The cycle grows and economic prosperity spreads. It reaches a crescendo of mania, and then crashes. Clearly we are now in the early stages of the next economic cycle.
A Rising Tide
As we have repeated often, one must follow the trend. The “Trend is Your Friend”. The trend today is “UP”. GE is considered a blue chip stock, a bellweather stock, and a indicator of US prosperity. As the US economy starts to roar, GE, with its fingers in so many industries, will enjoy the fruits of the rising economy.
As you watch the stock, you actually earn a 3% dividend, which is a lot more than the banks will pay you for your money.
The Chart
Never buy a stock without watching the chart.
The following chart shows the stock in 2007 before the market crashed. It traded in the $40 range, Then came 2007-8, and like every other stock, GE crashed. It fell below $10 to a low of $5.71 when everyone thought the world was ending. Then it began its rise again.
The following chart shows GE stock since the middle of 2007. As investors started to realize that the US was again becoming predominant in the economic world, the stock started to rise and it has risen constantly since October 2011, from $15.00 reaching a high of $28.00, just a bit higher than where it trades today, almost a doubling in value.
It is also true, that GE made significant changes in its business model, shedding certain lines of business, changing its management, and streamlining it s various business units, all of which are now resulting in increased profits. As can be seen from the following chart, GE stock is gaining strength and momentum as it rises.
We may or may not have positions in securities we name. In making an investment decision consider numerous factors such as portfolio balancing, timing, cash and capital reserves, asset allocation and other. Do your own research. Matters discussed contain forward-looking statements that are subject to risks and uncertainties and actual results may differ materially from any future results, performance or achievements expressed or implied.
Views expressed are opinions and not investment advice. You should retain a licensed professional to guide you and not rely on the opinions expressed herein. This report is neither a solicitation nor a recommendation to buy or sell securities. We are not a registered investment advisor nor a broker-dealer. The information contained herein is based on sources which we believe reliable but is not guaranteed as being accurate or a complete statement or summary of the available data.
