General Electric

As promised, I plan to give you all a bit of insight on some stocks of interest to me, starting with my first stock ever purchased, General Electric Company.

General Electric Company (NYSE: GE) is diverse company with business in the areas of technology, media and financial services to name a few. They make everything from aircraft engines to medical imaging machines. The four major sectors of the company are GE Technology Infrastructure, GE Energy Infrastructure, GE Capital and Corporate Treasury, and NBC Universal.

I've always heard that diversifying your portfolio was a good thing, so I wanted to seek out a company that had a diverse range of products and services to serve as a foundation to build upon. GE seem to fit the bill in that regard, so it was definitely worth taking a further look.

Management: One of the intangible factors to picking a winning stock can be the management. This is a principle that many experts preach, but few investors seem to put as much weight into as they probably should. In the case of GE, they have a strong reputation for building strong management from within. From their long time CEO, Jack Welch, to their current CEO, Jeffrey Immelt, GE has a reputation of being a well organized, well run business. The research I did on this factor was reading the book 'Winning' by Jack Welch, GE's former CEO. This book gave me a good idea of the principles management at GE use, as well as some of the overall corporate culture of the company. While I may not have agreed with everything in that book, I still came away with the feeling that GE was a well run company.

Financials: Without boring anybody to tears with too many specific numbers or equations, I researched the financial history of GE dating back 10yrs and found it to be a strong and growing company. I also found its stock to be greatly undervalued. My calculations gave the stock a relative value of $46.89, I found that it had a 52-week high of $38.52 and a 52-week low of $12.58, and the stock was selling at only $15.90 at the time. Further, I calculated an initial rate of return of 12.16% and an annual rate of growth of 8.54%. My conclusion was that this was an undervalued stock that was suffering from a poor overall market.

Outside Factors: Another point of investigation on this stock was with outside factors and trends. With the election of Barack Obama and his talk about infrastructure investment, I felt that GE might be a company that could greatly benefit if this plan came to fruition. There seems to be a bit of a wake up from America following the $4+/gal gas prices we saw last summer, and many seem ready to consider alternative energy sources. GE is poised to flourish from this shift. Any upgrades or additions to the nation's power grid or further acceptance of alternative energies such as wind/solar/water power would directly benefit GE since they are an industry leader in these areas. This sealed the decision to buy GE as my first stock.

Performance to Date: Keep in mind that this is based on roughly a week's time, but to date, my GE stock is up 12.89% from $15.90/share at purchase to $17.95/share as of this post. I'll keep you all posted over the coming weeks on any additional buying and selling of this stock, as well as its performance.