Jim Powell, editor of Global Changes & Opportunities Report, selected General Electric (GE) as his favorite investment idea for 2019. The stock has since risen 44%. Here's the growth stock expert's latest update on the industrial giant.
General Electric has been doing well since I recommended it last December. Although the road to recovery for this blue chip fallen angel has barely begun, investors already have a 44% gain.
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I think there is a lot more on the way for GE. Under the able leadership of its new CEO, Larry Culp, the company has been shedding its losing operations and refocusing on its core strengths. It’s an ongoing process that will take another three years to complete.
The company announced in mid-March that earnings will continue to decline this year, falling as much as 23% before a recovery in 2020. That doesn’t bother me a bit. The decline could still leave GE with higher earnings than it reported last year.
The company also settled a US Justice Department investigation into its role in the financial crisis and is paying down debt. It’s a slow process, but it’s underway.
General Electric took three years to collapse and it will likely take two or three years to recover. When it does, I believe the returns will be worth the wait.
As each new step is taken, the stock is likely to make another move up. I will be very surprised if GE doesn’t become at least a three bagger. Although GE is up from its lows, I still rate the stock a good long-term buy.
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