GE Aerospace (GE)

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GE Stock Is One Good Day Away from a Breakout

The beleaguered industrial icon is slowly but surely working its way out of trouble

By James Brumley, Investor Place Feature Writer

May 9, 2019, 3:32 pm EDT

https://investorplace.com/2019/05/ge-stock-good-day-away-from-breakout/

It’s been a long while since General Electric (NYSE:GE) has created any real inspiration for investors. It’s been so long, in fact, that the market may not recognize it when they see it, or perhaps not believe it even if they recognize it.

The speculative bull case for GE stock

Consider this your official notice that GE stock is almost a buy again. It’s a speculative, risky buy that’s not for the faint of heart. But, it’s almost a buy nonetheless.

An impending technical event also marks the turning point of the rhetoric that’s made General Electric stock such a headache to follow. Or maybe, it’s the other way around.

Possible Daybreak for GE Stock

It’s not a story that needs much in the way of retelling. GE stock continued to climb through 2016, reflective of its pedigree. Beginning in 2017, though, years’ worth of poor-decision making and obfuscation finally came home to roost. The company was (and still is) sitting on more debt than it can manage, and General Electric can’t figure out its role in the current, digitally-driven marketplace. The fact that it has seen three different CEOs over the course of the past couple of years speaks volumes.

There’s a path out of its trouble, to be clear. Its Power unit desperately needs to figure out why its wares aren’t marketable, and it needs to decide if it wants to be in the healthcare business or not. The once-vaunted organization also needs to get a grip on its debt. Here, shedding assets is logical but may not be the most optimal solution.

There’s no denying, however, that where GE is now is a much better place than where it was last year. The most recent quarter’s cash burn was a relatively modest $1.2 billion, versus the $2.16 billion in negative cash flow analysts were modeling. Earnings topped expectations as well.

It’s difficult to call it conclusive evidence of a turnaround. Even CEO Larry Culp conceded during last quarter’s conference call that “One quarter is a data point, not a trend.”

All new trends start with a pivotal quarter though, yet most of those pivots are largely dismissed in their infancy.

Turnarounds Happen

Case in point? None other than Apple (NASDAQ:AAPL).

Think back to the mid-1990’s, years after Steve Jobs stepped down as chief. Innovation and revenue had deteriorated, opening a huge window of opportunity for rival Microsoft (NASDAQ:MSFT) at a key time for the computer industry. Apple was almost bankrupt, but Steve Jobs took the helm again in 1997 and steered the company back to profitability.

Few thought it could happen at the time, however.