Q: Please tell me prospects for my shares of General Electric Co., which haven’t done well lately.
F.V., via the Internet
A: Worried about the U.S. economy? Go global.
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That’s the philosophy of the massive conglomerate, which is globalizing all of its businesses. Overseas sales accounted for more than half of GE’s total revenue for the first time last year, and there is likely more growth ahead.
It will invest $5 billion through 2010 in energy and water projects in Asia, Latin America and the Middle East. It is buying the pressure-control business of Luxembourg-based Tenaris SA for $1.12 billion. The backlog in China for its jet-engine orders recently reached $5 billion.
Meanwhile, it shut down its WMC Mortgage subprime business in November and has almost no exposure to the U.S. subprime-mortgage market. It sold its plastics business for $11.6 billion in 2007.
General Electric shares (GE) are up 1 percent this year following last year’s essentially flat performance, a 6 percent gain in 2006 and a 4 percent drop in 2005. In December, it announced it was raising its quarterly dividend 11 percent, to 31 cents a share, its 32nd consecutive year with an increase.
Revenue should rise by at least 10 percent this year, Chief Executive Jeffrey Immelt said in the firm’s annual report. Solid performance of its infrastructure, commercial finance, health-care and NBC Universal businesses should offset challenges of businesses dependent on the U.S. consumer.
The infrastructure segment is the main growth driver. It includes technology for the oil and gas industry, leasing, diesel engines, locomotives, wind-power units, jet engines, power generation, and water treatment.
Consensus analyst rating on GE stock is “buy,” according to Thomson Financial, which consists of seven “strong buys,” seven “buys” and four “holds.”
Earnings are expected to increase 11 percent this year, compared with 10 percent projected for the conglomerate industry. The five-year annualized growth rate is forecast as 11 percent, compared with 12 percent expected industrywide.
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Andrew Leckey is a Tribune Media Services columnist. E-mail him at [email protected].