This iconic blue chip industrial has lagged the market for years. General Electric Co. (NYSE: GE) is a highly diversified, global industrial corporation. Its businesses are organized broadly under six segments: GE Capital, Energy Infrastructure, Aviation, Healthcare, Transportation and Home & Business Solutions. The company’s products and services include power generation equipment, aircraft engines, locomotives, medical equipment, appliances, commercial leasing and personal finance. The Merrill Lynch analysts feel that the American giant will be a large player in the efficient energy field.
The company is in the middle of a huge plan that is scaling back many of its operation and returning capital to shareholders. GE announced a restructuring plan earlier this year that includes buying back up to $50 billion of its shares, selling about $30 billion in real estate assets over the next two years and divesting more GE Capital operations.
The repurchase program, which will be partly funded by $35 billion through money returned from GE Capital, is the second-biggest in history, after Apple’s $90 billion plan. GE, which had 10.06 billion shares outstanding at the start of the year, said it expected to reduce that by as much as 20% to 8.5 billion by 2018.
With the European Union expected to approve the Alstom plan Monday, the stock could be poised for a run. GE investors are paid a solid 3.83% dividend. The Merrill Lynch price target is $33, and the Thomson/First Call consensus target is $30.23. Shares closed Tuesday at $27.55.
This company is adding capacity at a breakneck pace and plays into the climate change theme at Merrill Lynch. SunPower Corp. (NASDAQ: SPWR) and First Solar formed a jointly form a publicly traded yield company that had a June IPO and is called 8point3 Energy Partners. Many think that company is uniquely positioned as a solar-only yieldco with joint sponsorships by two of the largest solar developers in the world.
SunPower offers solar power products, including panels, balance of system components and inverters. It also designs, manufactures and sells high-performance rooftop and ground-mounted solar power systems, as well as utility-scale photovoltaic power plants. In addition, the company offers operations and maintenance services, including remote monitoring, preventative and corrective maintenance services, as well as rapid-response outage restoration and inverter repair services.
The Merrill Lynch team previously noted that company management expects to add significant production capacity, including a new 800 megawatt fab that will target 25% cell efficiency. This will allow the company to leverage the high-efficiency technology and low-cost financing to expand on projects around the world.
The Merrill Lynch price objective is $42, while the consensus target is $38.31. The stock closed trading on Friday at $22.88, down almost 50% from highs printed in the summer of 2014.
These and other top themes that Merrill Lynch highlights are a huge part of the future. While some investors shun new areas of investment, those that have the risk tolerance and patience often can rack up big gains betting on the future.