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Like most of us, you’ve probably fantasized about buying stock in a company that will skyrocket in value in a couple of years, giving you enough money to travel and relax for the rest of your life.
Perhaps General Electric was one of your top picks for investing in its stock, or it will be. In reality, investing is a little more complicated than waiting for birds to fly into your mouth, ready to be roasted, but you have to start somewhere, right?
The good news is that, unlike in the past, you can now buy shares in companies such as General Electric entirely online. While we do not recommend buying General Electric shares in particular, this article explains in layman’s terms how to buy shares in General Electric and would answer the question “Is GE a good stock to buy?”. It’s up to you whether General Electric should be your first stock purchase.
General Electric is a US industrial company that trades on the New York Stock Exchange under the ticker GE. It is well-known for its work in aviation, healthcare, power, renewable energy, digital industry, additive manufacturing, venture capital and finance, lighting, and oil and gas.
If you want to buy its stock, you’ll need to find a broker who gives you access to the NYSE, as that’s the main exchange where it’s traded.
All of this does not imply that General Electric is a good or bad company. Neither does it answer the question “is GE a good buy”. However, as part of this example, you may want to be reminded of what you are considering investing in.
Before answering the question ‘Is GE a good buy?”, we would first discuss how to buy and invest in GE. The steps of buying General Electric shares
The exchanges to which an online broker has access is one of their characteristics. Because they do not have access to the NYSE, not all brokers allow you to purchase shares of General Electric. Needless to say, you will require a broker to gain access to this exchange.
The next most important aspect of a broker is that it fits you as well. Not every broker allows every citizen to open an account with them; some brokers are prohibitively expensive if you only want to buy a couple of General Electric shares now and then, while others are completely free.
When recommending a broker, we consider a variety of factors such as the broker’s fees, trading platform, trading markets available, and how simple it is to open an account.
You must open an account after locating your online broker. This is similar to a regular bank account, and opening one is usually done entirely online.
Some brokers make it as simple as opening a new Gmail account, while others require a couple of days before conducting a background check on you. Instead of storing money on it, you will store General Electric shares on it, so you will definitely need this to buy and store General Electric shares.
You will be paying cash for those General Electric shares. This money must first be sent (deposited) to your broker. This is usually very simple and quick, even easier than opening a brokerage account.
Bank transfers and credit/debit card deposits are the most common methods of deposit. Some brokers, such as eToro, allow you to deposit funds into your investment account using different electronic wallets such as PayPal.
You have the account, the cash, and the target share price. The final step is to click the buy button! You log in to your online brokerage, search for General Electric shares, enter the number of shares you want to buy, and click buy to complete the transaction (in trading lingo: execute the buy order).
A couple of hints: when placing an order, you can select from several order types. The market order purchases the share at the current market price, whereas the limit order allows you to specify the exact price at which you want to purchase the share.
You’re not done after purchasing your General Electric stock. It is now critical to keep track of your investments. This essentially means adhering to your investment strategy.
If you purchased a General Electric share with the intention of holding it for a longer period of time, you might attend the annual meeting and gather all of the company’s news and information.
If you intend to sell it soon after the price rises, you may want to use different position management tools. For example, you can set the target price at which you want to sell the share for a profit, or you can use the stop-loss price to set a price at which you want to sell the share to avoid further losses.
Investing in General Electric, like any other investment, entails some risk. Please take the time to read the following BrokerChooser tips to help you reduce your risks. You can also learn more about market risk and other types of risks by visiting this website.
Risk: Unfortunately, there are a plethora of fraudulent “brokers” out there looking to steal your money. When you see binary option ads and automated investment algorithms that generate excellent returns, you should be extremely skeptical. In these cases, the best thing to do is to decline these advertisements right away.
How to handle it: When purchasing shares online, use our broker recommendations. We have an active account with the brokers we chose, and we test them on a regular basis.
The risk is that you will spend all of your savings on one or two stocks. If General Electric fails, you will lose all of your invested funds.
To manage it, buy other stocks in addition to General Electric to diversify your investment portfolio. This practically means diversifying your holdings and not putting all of your eggs in one basket. The optimal number of shares in a portfolio ranges between 20 and 30.
As it transitions into an aviation-only company, General Electric (GE) is seeing end markets and cash flow improve. However, supply disruptions and rising inflation put aviation’s recovery from the coronavirus pandemic in jeopardy.
GE reported mixed earnings for the most recent quarter on January 25. CEO Larry Culp stated that the company’s key jet-engine aviation business is continuing to recover while dealing with the impact of the Covid-19 omicron variant.
Shares failed a brief breakout above 115.30 on November 9, and there is no new buy point so far. GE stock is now trading well below a falling 10-week moving average, having underperformed its longer-term, 40-week counterpart. Both of these are technical drawbacks.
Shares surged in November on news of GE’s three-way split, but have since fallen. According to MarketSmith charts, the relative strength line for GE stock has dropped dramatically since last March. On the back of GE’s turnaround, it rallied for much of 2020 and 2021. A rising RS line indicates that a stock outperforms the S&P 500 index. It is represented by the blue line in the graph.
The industrial behemoth receives a drab IBD Composite Rating of 46 out of 99. The rating is based on a single score that combines key technical and fundamental metrics.
GE stock has an EPS Rating of 57 out of a possible 99, and an SMR Rating of D on a scale of A+ (best) to E. (worst). The EPS Rating compares a company’s earnings per share growth to that of all other companies, while the SMR Rating considers sales growth, profit margins, and return on equity.
GE has sold a biotech unit, its light bulb business, and a majority stake in its oil field services business in recent years. It is combining its aircraft leasing division with AerCap (AER). It is expected to phase out jet leasing entirely in the future.
On Jan. 25, GE reported earnings of 92 cents per share for the December quarter, exceeding expectations. Revenue fell by 7% and was missed due to supply-chain issues. GE’s aviation business increased sales by 4% year on year during the quarter, while health care was down 4%, renewable energy was down 5%, and power was down 10%. In addition, the company reported $3.7 billion in industrial free cash flow (FCF) for the quarter and $5.8 billion for the full year.
However, GE forecasted lower-than-expected 2022 earnings per share, citing inflationary costs. Revenue and FCF are expected to improve further. The FCF figure is closely watched as an indicator of GE’s operational health and ability to pay down debts.
In 2020, GE generated $606 million in FCF, a 66 percent decrease but a beat on its own projections. Indeed, General Electric achieved cash-positive status a year ahead of schedule.
Analysts predict that GE earnings will increase by 96 percent in 2022, while sales will increase by 5 percent. However, FactSet predicts that General Electric will surpass its 2019 earnings per share of $5.20 only next year. In 2023, GE earnings are expected to increase by 59 percent as sales increase by 8 percent.
Technically, GE stock is trading below key support levels after its most recent breakout attempt failed. It has no current buy point, and the RS line lags significantly when buying.
Buying an index fund, such as SPDR S&P 500 (SPY), would have provided safer, higher long-term returns than GE stock. In summary and as an answer to the question “Is GE a good stock to buy?”, you would be better off buying other stocks than GE.
GE has split its stock seven times and completed an additional reverse split-
GE distributes a quarterly dividend. The most recent dividend was $0.08 per common share, paid on October 25, 2021 to shareholders of record on September 27, 2021.
GE had 1,098,137,128 shares of common stock as of September 30, 2021.
Since October 2018, H. Lawrence Culp Jr. has served as GE’s chairman and CEO. In April 2018, he was appointed to the GE Board of Directors. Culp served as CEO of Danaher Corp. from 2000 to 2014, having joined the company in 1990.
GE, one of the Dow Jones Industrial Average’s founding members, has been dropped from the index three times in its history. GE was removed from the index in 1898, only to reappear the following year, in 1899. It was dropped again in 1901 before returning to the Dow in 1907. It was most recently removed from the index in June 2018.
No. GE stock is not a good investment. Buying an index fund, such as SPDR S&P 500 (SPY), would have provided safer and higher long-term returns than GE stock. If you want to invest in a large-cap stock, IBD has several good options.
According to an analysis of the stock’s sell-side analyst price targets, General Electric’s shares appear to be poised for a rebound. GE’s mean consensus target price is $124.71, which is +25% higher than the company’s last traded share price of $99.95 on January 6, 2022.
The median 12-month price target for General Electric Co among the 16 analysts providing 12-month forecasts is 116.50, with a high estimate of 132.00 and a low estimate of 100.00. The median estimate represents a +23.10% increase over the previous price of 94.64.
The average analyst price target for GE stock is $117 per share, implying a 17 percent increase from current levels.
The overall PEG of the S&P 500 is currently around 0.9; GE’s PEG is 0.27, indicating that GE is significantly undervalued after accounting for its growth. Another important valuation metric is the price-to-sales ratio, which is especially important for unprofitable companies and growth stocks.
GE is classified as a member of the industrials sector, despite the fact that it operates in a variety of industries. 8 GE’s main competitors include Honeywell International Inc. (HON), 3M Co. (MMM), Siemens AG (SIEGY) of Germany, and Schneider Electric SE of France (SBGSF). For fiscal year 2020, GE reported $5.2 billion in consolidated net earnings attributable to common shareholders on $79.6 billion in consolidated revenues.