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General Electric: The Turn Is Actually Already Occurring

April 15, 2019

Summary:

- General Electric's stock is outperforming the market so far in 2019.

- I believe that the management team is making significant progress toward turning around this storied industrial conglomerate. However, more work still needs to be done.

- I am long General Electric, and I plan to stay long the stock.

 

General Electric's ($GE) stock has been extremely volatile over the last three years, and nothing has changed over the first three-plus months of 2019. GE's shares have outperformed the S&P 500 (SPY) so far in 2019 (18% vs. 16%, respectively), but the industrial conglomerate's stock price is still significantly lower than it was a year ago.

 

Investors were extremely bullish after management talked up the company's prospects in early 2019 (notice the steep climb in January), but the bears quickly took back control, with the most notable example being JPMorgan's Stephen Tusa recently lowering his 12-month price target to $5.00 (from $6.00). Simply put, sentiment was improving until, of course, Mr. Tusa rained on the parade.

 

Near-term stock pressure is a hard pill to swallow, but, in my opinion, investors with a long-term mindset will be rewarded once Mr. Larry Culp, CEO, and team are finally able to turn the ship. But it's important to note that the turn is actually already occurring.

 

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