Today was a fairly good day on the market. Everywhere I looked was the color green. A big surprise was GE. About three hours into the day, GE was almost up by 3%.
When I saw the move in GE, it caught me by surprise. It is not often that GE moves quite so sharply- At least to the upside. However, everything has its season. With that in mind, I wonder if the season is coming for GE.
As far as the stocks on my list, PM has been on fire. Also, a stock that I was completely wrong about, MCD, has just taken off. It was not a winner today, but it has moved up considerably since the restructuring was put in place.
It is amazing how a few changes can turn a company, as well as the stock, completely around. That is what I have been waiting for with GE. I have been steadfast in my belief that if GE cut the fat and focused on the things they do best, the company would turn around and the stock would see numbers not seen for almost 2 decades.
Given that GE has essentially been in the toilet for over 10 years or more now, It is hard to believe that it is still the 6th largest company by Market Capitalization. Every stock that is more valuable has been on fire in recent years. I wonder how valuable GE could become if it finally ignites.
One thing I do know is that if it does catch fire, the market cap will probably stay somewhat contained, because many shares are going to be taken off the market. By the way, I wonder how many shares will be repurchased this quarter? No matter how many that may be, GE is probably going to pay more than they should for them. It seems inevitable if the stock does start to gain traction.
Where does GE go from here? I can say that I hope the answer is higher-much higher. However, that is not a given. I do know that the appliance division should be sold soon, and almost 3/4 of GE Capital is already a done deal. So, shares need to be repurchased, the SIFI stigma needs to be addrrssed, and the leftovers from GE Capital need to be dealt with efficiently.
The one thing that seems to be on the back burner is the dividend. I, and tons of others, want this addressed first and foremost. As long as the dividend is just sitting stable, it becomes less attractive as the share price climbs. Also, those dividends by less and less shares as the stock price rises. It is a lose-lose scenario no matter how you look at it, unless we sell the shares as the stock price rises in order to collect some of the profits.
I can surely say, I would have really been happy with an increased dividend this past year. Also, since the dividend was only increased by 1 cent/quarter the year prior, we are really not in much better shape as far as income goes and overall value of the shares. I know that the shares have increased by about 25% over the past year, however the shares were 28.03 for a day at the end of 2013. So, in about 2 1/2 years, the stock has gained about $3/share not including dividends. Kick in the dividends, and the total is almost $6. That is not a bad return if the shares were purchased in the 25 dollar range, but for all the shareholders who have been in it for the long haul, the return is less than stellar, and it is in no way anything to write home about.
I have been in this position because I always felt that it was a complete turnaround play. I just hope that it is almost turned around. I know that once the turnaround is complete, it will take time to move forward with a head of steam. I think that most of the building blocks are in place, and I hope that Jeff Immelt can finally deliver on his plan. Afterall, he is ultimately responsible for the performance of GE. There has been a lot of talk and tons of promises, and I hope that, soon, Jeff will walk the walk, as well as, talk the talk.
I can only imagine where we are headed from here. The past 15 years has been quite a bumpy ride. It seems everything that could go wrong did. 9/11, Fukushima, The Great Recession, SIFI, oil crash, and a ton of other tragedies including lawsuits, broken and aborted deals (Honeywell comes to mind) and the never ending reduction in industrial output. Hopefully, the next fifteen years are much more stable, and much more profitable. We shall soon see. However, in the interim, the question is, “Where to Mack?”
AKA — DividendDreamer