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General Electric: A Fixable Company And Situation

October 8, 2018

Summary Points: 

- The stock is up big since General Electric announced its CEO change.

- The struggles of the Power unit and the company's poor financial position have caused downward pressure for the stock but, in my opinion, General Electric is a fixable company.

- I plan to stay long General Electric. What do you plan to do?

 

Long suffering General Electric ($GE) shareholders have enjoyed a nice ride since the company announced that Mr. Larry Culp, the former CEO of Danaher Corp, would replace Mr. John Flannery as CEO.

 

While shares are up big in such a short period of time, I still believe that the risk is currently to the upside, of course, over the long-term — that is, most of the bad news is already priced into the stock, in my opinion, so a string of positive developments would likely result in a significantly higher stock price. There are definitely risks that need to be considered/evaluated (will be discussed below), but I believe GE shares at the current level are attractively priced. Moreover, Mr. Culp appears to be the right guy for the position and he without a doubt has a proven track record but, in my opinion, it is somewhat easy today to overlook the fact that whoever is leading this industrial conglomerate has some great businesses to work with.

 

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