If any stock has taken a beating over the past three years, it has been this legendary corporation. General Electric Co. (NYSE: GE) businesses are organized broadly under seven segments: Power, Renewable Energy, Energy Connections, Oil & Gas, Aviation, Healthcare, Transportation and GE Capital. The company’s products and services include power generation equipment, aircraft engines, locomotives, medical equipment, compressors and others. Over half of the business is tied to service and aftermarket support.
In 2018, the venerable American industrial giant got the ultimate humiliation of being removed from the Dow Jones industrial average after a stay of over 100 years. General Electric is still one of the most valuable brands in the world.
The BofA analysts continue to make the case that GE continues making operational improvements and lowering structural costs under the new leadership. While the company faces near-term pressures in Aviation, it had diverse operations. Over the medium term, improving free-cash-flow should support share price appreciation.
Investors receive a 0.65% dividend. The $11 BofA Securities price target is near the $11.61 consensus target. General Electric stock traded above $7.50 on Friday.
Hewlett Packard Enterprises
Shares of this spin-off from a Silicon Valley legend hold solid upside potential. Hewlett Packard Enterprise Co. (NYSE: HPE) consists of these four segments:
- Hybrid IT (provides servers, storage, data center networking and Pointnext brand services)
- Intelligent Edge (enterprise networking and connectivity for campus and branch environments, operating under the Aruba brand)
- Financial Services (enables flexible IT consumption models)
- Corporate Investments (including HP labs and business incubation projects)
In August, the company delivered a strong beat on the top and bottom lines due to strong execution on backlog and improving demand. BofA Securities views reinstatement of guidance as a net positive, indicating better visibility and improving trends. The stock remains inexpensive relative to peers.
The analysts also feel that continued cost improvements and gross margin structural changes (pivot to higher margin as-a-service and storage revenue) should drive profit growth. Quality of recurring revenue and position can drive a better profit profile over time.
BofA Securities has set a $15 price target. The posted consensus target is $13, and Hewlett Packard Enterprises stock traded mostly below $9.50 last week.
Aggressive growth investors looking for more reasonable trading ideas, but wanting to avoid the pitfalls of Robinhood-inspired trading madness, should find all four of these legendary companies right up the proverbial alley. While it is doubtful they can return to all their past glory, it’s never out of the question, especially with new management at the C suite levels.