January 21, 2011
A recent New York Times piece on General Electric detailed the company's efforts to pare back its financial services operations and return to its roots - making stuff. You know the stuff they mean: kitchen appliances and jet engines, solar panels and locomotives, medical-imaging equipment and yup - light bulbs. For the 20 years preceding our recent financial crisis, GE's financial operations generated billions in profits, and at times appeared to obscure those old-line manufacturing operations that were always the heart and soul of the company. But reaching ever farther to generate profits led GE into a variety of risky loans that resulted in billions in writeoffs, a 67% dividend cut, and the loss of GE's treasured AAA credit rating in early 2009.
Now nearly two years later, GE is back. The stock has tripled in price since March of 2009, the dividend has been increased (twice) in the last six months, and this morning's wires bring a 4th quarter earnings report that should warm the hearts of shareholders and employees. Profits were up 15% for the full year and 31% for the fourth quarter, suggesting a sharply improving trend. Too many investors have ignored GE over the last year. That's likely to change.
My next post will get back to our "Ten Steps to Financial Freedom Series" with Step # 6.
GTC
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).