General Electric Company is a company based in the United States. The company designs, manufactures, and sells a wide range of industrial products around the world. It operates within the aviation, capital/financial, Power, and Renewable Energy sectors. The company was founded in 1878.
Why You Should?
- General Electric is a great reopening play in an investor’s portfolio. The company saw many headwinds during the pandemic as spending on industrial products in the sectors that the company operates in (especially Aviation) fell as the pandemic took hold. However, once the pandemic is over, the company will see growth once again.
- General Electric has been trying to turn itself around as the company has massively underperformed and stagnated over the past couple of years. The company has sold many of its assets to become a leaner company with a focus on growth and profitability. If this turnaround story works out, the company would return to its old self, a growing industrial giant.
- A Biden administration will benefit the company. Biden looks to spend trillions of dollars on infrastructure (especially renewable energy) and will also look to sign massive trade deals with our allies once this pandemic is over. This political environment will benefit the company and its investors in the future.
Why You Should Not?
- The company faces tough competition in the industrial and commercial sectors. Some of these competitors include Raytheon Technologies, Boeing, Hitachi, 3M, and many others. This competition might hurt the company and its investors in the future.
- In the past, the company has had a history of horrible leadership. This is one of the many reasons why the company’s stock price has fallen over the past couple of years despite the strong global economy. The company has been turning its business around but a past history of lackluster leadership will definitely hurt the company and investors in the future.
- Another reason why the company’s stock price has fallen over the past couple of years is an extremely weak balance sheet. The company has been ridden with debt as it looked to expand its business and bad financial decisions made by executives. Though this is changing as the company looks to restructure itself, it will take some more time, leading to underperformance.
- Over the past couple of years, the company has been changing its CEO over and over again as they look to find the best person to lead the company through this turnaround process. However, the constant changing of executives has frustrated investors as they look for more stability and certainty. This has hurt the company and its investors
I think that General Electric might not be the best long-term investment option due to competition, horrible leadership, a weak balance sheet, as well as high CEO turnover. However, the company is a good reopening play, a possibly fruitful turnaround story, as well as positive impacts from the Biden administration, might benefit the company and its investors in the future.