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I'd Buy General Electric At The Right Price Too

January 14, 2018

Summary Points:

*Warren Buffett recently said that he would buy General Electric at the right number. Makes sense, right?

*General Electric's stock has performed well in 2018, but let's not get ahead of ourselves.

*Looking out, I believe that General Electric's stock is a long-term buy at today's price.

 

In a recent interview, Warren Buffett told CNBC's Becky Quick that he would buy General Electric (GE) at the "right number," which led to speculation that Berkshire Hathaway (BRK.A) (BRK.B) may currently be looking to get back into a GE position. Let's remember that it was only a few short months ago that Berkshire disclosed that it sold a small GE position and build its stake in Synchrony Financial (SYF) (a 2014 spin-off from GE). Since this announcement, GE shares are down over 20% while SYF shares are up over 30%.

 

Talk about great timing, right? After a rough 2017 (GE shares were down ~45% compared to the S&P 500 being up ~20%), the company's stock has actually performed pretty well in the new year. So, what should investors do now? I believe that the "right number" for this industrial conglomerate depends on many factors, including your time horizon, but, in my opinion, you will not get burned if you layer into a GE position at current levels.

 

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