This article is only my opinion and should not be seen as trading advice.
One story plastered over financial news boards across the world lately has been the fact that General Electric (GE) has been vastly underperforming its own expectations, as well as its peers in the Dow. From leadership changes, to a dividend cut, GE has dropped around 20% in the past 2-3 months. Some are calling for GE to be removed from the DJI on the grounds that it is sandbagging the rest of the widely successful companies. However, I have a different view on GE, and I believe that we should not only keep GE in the Dow, but I believe now may be the time to buy GE.
First of all, GE is a huge conglomerate, with a mass of diversified industries which allow them to shift capital from less successful investments to more successful ones. I believe this is the stage that the company is in now. They were caught with too much money in industries with lower profitability, but they will now be able to increase profitability through sectors like renewable energy, digital technology, healthcare, etc.
Also, once oil prices continue to increase, this will increase GE’s margins, leading to more short time return on their huge investment in their oilfields, which will allow for better cash flows and a return to the normal dividend level.
Lastly, GE has many of its operations in international locations, and with the strength of the U.S. dollar, the returns on these investments should also look promising in the short to medium term.
For other articles on investing for beginners (and some good information for established investors) visit my blog at www.istartinvesting.wordpress.com
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Celadon Group, Inc. (www.celadongroup.com), through its subsidiaries, provides long haul, regional, local, dedicated, intermodal, temperature-protect, flatbed, and expedited freight service across the United States, Canada, and Mexico. The Company also owns Celadon Logistics Services, which provides freight brokerage services, freight management, as well as supply chain management solutions, including logistics, warehousing, and distribution.
Lundin Mining is a diversified Canadian base metals mining company with operations in Chile, the United States of America, Portugal, and Sweden, primarily producing copper, nickel and zinc. In addition, Lundin Mining holds an indirect 24 percent equity stake in the Freeport Cobalt Oy business, which includes a cobalt refinery located in Kokkola, Finland.
Applied Optoelectronics, Inc. (AOI) is a leading developer and manufacturer of advanced optical products, including components, modules, and equipment. AOI’s products are the building blocks for broadband fiber access networks around the world, where they are used in the internet data center, CATV broadband, fiber-to-the-home and telecom markets. AOI supplies optical networking lasers, components and equipment to tier-1 customers in all four of these markets. In addition to its corporate headquarters, wafer fab and advanced engineering and production facilities in Sugar Land, TX, AOI has engineering and manufacturing facilities in Taipei, Taiwan, and Ningbo, China.
This week – NASDAQ crossed 6000 and investors greeted the move with a yawn. The index which is laden with tech names turned the industrial and bank Trump rally on its head by closing at new record highs just yesterday. Technology stocks which are not direct beneficiaries of Trump’s heavy industry protectionism have found a way to prosper. AMZN ($909.29), GOOG ($871.73) and CSCO ($33.40) have been big beneficiaries of this powerful move higher. The only thing that could derail this tech love in would be a rate hike and that doesn’t seem to the case. Trump is in love with a lower dollar to help the steels and other industries so look for more upside on some of these NASDAQ heavyweights.
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