The market rally has pushed many stocks to new highs and many LEAP premiums to new highs as well. It is time to find a boring, unappreciated stock where the premiums are cheap but there is still a strong potential for gains. GE fits that description. You would have to work hard to find a stock that was more boring but it would be impossible to find a company as solid as GE.
GE - General Electric - Company Profile
General Electric Company (GE) operates as an infrastructure and financial services company worldwide. The company's Power segment offers gas and steam power systems; maintenance, service, and upgrade solutions; distributed power gas engines; water treatment, wastewater treatment, and process system solutions; and nuclear reactors, fuels, and support services. Its Renewable Energy segment provides wind turbine platforms, and hardware and software; offshore wind turbines; and solutions, products, and services to hydropower industry. The company's Oil and Gas segment provides turbomachinery solutions; surface and subsea drilling and production systems, and equipment for floating production platforms; measurement and control products; and compressors, pumps, valves, and natural gas solutions. Its Energy Management segment offers industrial and grid solutions; and power conversion systems. The company's Aviation segment designs and produces commercial and military aircraft engines, integrated digital components, electric power, and mechanical aircraft systems; and provides aftermarket services. Its Healthcare segment offers diagnostic imaging and clinical systems; products and services for drug discovery, biopharmaceutical manufacturing, and cellular technologies; and healthcare information technology products. The company's Transportation segment provides freight and passenger locomotives, parts, wreck repair, software-enabled solutions, mining equipment and services, marine diesel engines, and stationary power diesel engines and motors, as well as overhaul, repair, and upgrade services. Its Appliances & Lighting segment sells and services home appliances; and manufactures, sources, and sells lighting solutions. The company's Capital segment offers commercial lending and leasing, factoring, energy financial, and aircraft financing and leasing services. Company description from FinViz.com.
GE is a very boring company. They are huge, they move slowly and there is no excitement in their earnings or forecasts. Because they are so boring a straight LEAP call is only $1.85 and the risk from a future bout of profit taking is minimal.
GE is doing all the right things. They are spinning off their energy division to merge with Baker Hughes and create the second largest services company in the oilfield. They sold off their financial services divisions to escape the government's control as a systemically important financial institution (SIFI).
In their recent earnings, they had some delivery problems with some giant wind turbines that shifted revenue into Q4. They continued to suffer from the depleted energy sector and that prompted the spinoff of that division.
They pay a 3% dividend and the company is always growing. Boring.
In this market, with the potential for profit taking over the next couple of months we need some more boring companies in the portfolio. Just don't expect to see a lot of news on GE in the weekly updates.
Buy Jan 2018 $32 call, currently $1.85, no initial stop loss.