fundamental analysis

Is General Electric the Company for Very Long Positions?

The truth is that is a really tricky question. Why is that? First of all GE is one of the largest companies in the world, and to foresee its direction with precision is slightly impossible (to use kind words). It is such a big company, that probably not even their own directors have an exact idea of where it is going to head for the next 6-12 months…
Yet, the analysts remain convinced that the current share price ($16.1/share) might go even upper in the incoming weeks. Some analysts mention $17 share, others even recommend entering long positions with GE since a recovery will come sometimes for GE.
The analysts point at its strong rating (AAA-), at its strong profit margin (9.54%) and its strong ROE (16.4%) for 2008. Impressive indeed. What those analysts ignore that those financial parameters went down substantially in 2009 and that no one knows when and how much will they turn around. It might seem logical, but my opinion is that most of the analysts are ignoring the simple truth that a crisis recovery takes 1.5 to 2 times longer than the plunge. And we have just seen the first signs of the recovery, but…Read More »Is General Electric the Company for Very Long Positions?