GE, Stock Of The Day, Nears Buy Point Amid Turnaround, Historic Split

General Electric

General Electric

GE

$1.33


1.61%


30%

IBD Stock Analysis

• Rebounding from 10-week line after round-tripping November breakout.

Composite Rating

Industry Group Ranking

Emerging Pattern

Pullback

* Not real-time data. All data shown was captured at
2:53PM EST on
12/14/2022.

General Electric (GE) is tracking an aerospace industry rebound, with a round of new orders for industry leaders like Boeing (BA) underscoring an improving outlook. GE stock was poised in a follow-on buy situation on Wednesday.

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General Electric operates four main business units. The Aviation unit designs and manufactures aircraft engines and various systems for commercial and military applications. Healthcare manufactures various patient monitoring and diagnostic equipment.

Renewables offers a broad range of generation, transmission and storage components and systems. GE’s Power segment focuses on power generation technologies including gas turbines, steam generation and nuclear power.

In 2021, aviation was almost 29% of the company’s $74.2 billion in overall revenue. Health care was almost 74%. Renewable energy was 21% and power was almost 23%.

Divvying Up Edison’s Legacy

In July, General Electric announced it would divide into three publicly traded companies in 2023-24: GE Aviation, GE HealthCare and GE Vernova, which will combine its power and renewable energy businesses. The company said it tentatively plans to execute the split early in 2023.

It will be just the latest permutation of the 130-year-old company, which was originally formed from companies owned by Thomas Edison and consolidated into the Edison General Electric Company.

GE broke a five-quarter string of earnings advances in Q3, reporting a 39% drop in earnings and a 2.8% rise in revenue. The earnings number undercut analysts’ targets, while revenue was better than expected.

For the full year, GE sees EPS of $2.40-$2.80, down from its initial guidance of $2.80-$3.50.  Analysts polled by FactSet provide a consensus estimate of $2.56 for the year vs. $1.78 in 2021 and just 14 cents in 2020.

GE Stock: A Rebound From Support

A two-week pullback sent GE stock to a quick touch down on its 10-week moving average on Monday. The rebound from that line presents a follow-on buy opportunity.

A rebound from support is not a good place to open a new position. But the rebound may help investors who bought during the stock’s early November breakout from a bottoming base. GE rose not quite 9% from that breakout, then lost its breakout verve.

A move above Tuesday’s high of 84.90 would offer a specific trigger, topping the 21-day line and breaking a short trendline while still being close to the 10-week line.

Shares pulled back narrowly below the buy point Tuesday, technically triggering a sell rule, but not the automatic stop-loss rule.

It’s always best to pyramid into a stock on a rebound. In this case, there is a possibility GE stock could consolidate and form a base-on-base pattern.

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