The first time I ran into General Electric (GE) was during an aircraft-leasing deal that went bad. GE was the main creditor on that deal.
I admit, I haven’t been much of a fan since. But there’s no getting too far away from this company, with its massive global reach. And even after a subsequent series of run-ins, this name–especially its stock–has never been far from my mind.
In fact, back then I had nightmare visions of my company’s portfolio actually owning the plane, the crew and even the fuel, if new terms could not be worked out.
Eventually, that restructuring deal got done and my client was better off in the end. But the realization of GE’s power in lease finance remained with me.
But this story doesn’t end there. That’s because GE is simply everywhere. And if you’re a global-focused investor, this is a name you can’t afford to ignore, either.
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At one point, I was asked to tour the U.S. and inspect power plants before investing in a Texas-based utility company. I landed on a mud airstrip fenced in to keep the cows off it. And there, in the middle of this desolate area, was a power plant with huge GE engines.
The purring sound of well-tuned, high-powered GE engines left me wondering if they had somehow stolen the plans from some celestial beings. I felt a strange glow after that trip, although my daughter Anna claimed it was from a nuclear plant I spent so much time at!
But in all seriousness, when you think GE, you should think money.
For me, my most nerve-racking encounter with this ever-present global conglomerate was on the financial-services playing field.
As an analyst, I had just downgraded a company’s rating and was telling others to avoid it when GE stepped in as an off-balance-sheet partner to make an acquisition.
In fairness, the GE team surely knew how to make a buck by buying and selling portfolios of insurance companies. But given the liquidity and investing risk in these, I’m glad they ultimately spun off that operation.
My most interesting run-in with the company, however, occurred this week. That’s when I had the pleasure of meeting current GE management on their annual swing through Florida.
And given how poorly that stock has performed, I was skeptical until I saw one slide that illustrated the key attraction:
In my nearly 30 years of managing money and picking stocks, I have never, ever seen a corporate team so confident about its future as GE is now. And looking at this graphic, you can see why.
While management was talking about getting the finance operation down to a third of the company’s business, I could not take my eyes off this $100 billion in future available cash chart.
This basically says, “You should think of GE as a very high-yield stock.”
With a current dividend yield of 3.5% and the potential for very significant share buybacks, this is at least a 5% yield with organic growth to offer, too.
I can go on with a half-dozen other reasons why GE should be on every global investor’s watch list. This includes growth prospects in emerging markets like Brazil and Russia … new technology and services initiatives that will add billions in revenues … and a long list of projects to keep cutting the company’s costs and overhead.
Anyway, this one is now on my short list as a future addition to my Emerging Market Winners service, and should be on yours, too. But don’t add this stock just yet.
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