General Electric (GE)

The new CEO has done a good job of spinning off businesses like healthcare to focus GE on core operations. Can probably hold this for 5 years. Good CEO and end markets. She missed this.

With its 62% YTD increase, it is not cheap now at 52X earnings. Yield is tiny at 0.30%. But the balance sheet is remarkably better. It is now sitting on $39B cash (it does have $11B in preferred share obligations). Free cash flow is running about $5B annually. EPS is expected to dip this year before a very strong recovery expected in '24. GE's recent results reflect robust demand and margin gains in all units. Aerospace's margin of 19% vs. 16.9% consensus, even with a 53% jump in LEAP engine shipments, was led by surging commercial services and pricing. Margins may cool as rates rise. Renewables beat with 5% organic growth (after six straight declines) and 50 bps of margin expansion. Order gains of 94% show a rebound in Grid and Onshore Wind as the Inflation Reduction Act stimulates demand. Power's organic sales rose 11% on double-digit gains in Gas Power Services and solid pricing. The 2023 outlook may have upside in Aerospace, depending on the equipment vs. services mix and volume. Overall, a remarkable turn here. We like its growth prospects, but have some difficulty with the current valuation. We would rate it a HOLD. 
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A great story this year, building its liquidity that will help retire their debt-ridden divisions. Next year, they will spin off their wind power business which has excelled this year. Momentum will continue for the next six months at least. Likes it.

The GE Healthcare spinoff was a good reward for investors. It has an excellent CEO and beat on the last quarter. Also it is the beneficiary of jobs coming back to North America. Most analysts that follow it have a 50% earnings per share growth target. Buy for a 3 to 5 year hold.

Their spin-outs have made this story simpler, like healthcare, and next year renewables. GE will become a pure-play aviation company which has secular growth; GE customers are Airbus and Boeing.

Stock price has come on, though perhaps not in the larger context. Gets credit for performance in 2023. Purging of really good assets to bolster cashflow. Trying to resurrect assets from the trash bin or close to it. Doing OK, but still a cashflow problem. Better choices elsewhere.