Is General Electric Company a good stock to buy right now? After its toughest year since the financial crisis, General Electric Company (NYSE: GE) is off to a great start to the new year. After dropping a whopping 45 percent in 2017 the company is now experiencing an apparent turn-around with a 9 percent increase to kick off 2018. Is this the beginning of a huge bull run or a false start?
Bloomberg columnist Brooke Sutherland tried to tackle this question in an article on Friday. She believes that although GE currently has the best year-to-date performance in the Dow, it still has a lot of kinks in its armor to work out. Keep in mind that the year has only just begun and the stocks can turn in the blink of an eye. And while they are taking strides to pull out of the slump they just encountered, getting back on track will be no easy feat.
Back in November, GE had to cut its dividend and finally admit that the business could no longer produce enough cash flow to fund its rich payout. So why the sudden increase in the stock price? Analysts have a few theories on the matter. One is the simple argument that the company has nowhere to go but up. While others suggest that higher oil prices could potentially aid in its energy business.
It just so happens that analysts with accurate predictions about General Electric Company in 2017 don’t expect much of a difference for this year. But that’s not to say that the new CEO, John Flannery, can’t turn the company around. GE will have to undergo more cuts in its assets and practice its ability to lower its pension deficiency to amend cash flow and be able to pull off asset sales. Only time will really tell whether or not the management is all bark and no bite. And Flannery acknowledges this key factor by stating, “I can say anything I want today and until we produce the results, it’s not going to matter”. We all know that these results don’t just happen overnight. It could be another year or more that buyers of the company’s stocks begin to see these results. Until then, stock-holders may be stuck with dead money.
