The government may have reached a deal on the debt ceiling but that did not stop the stock market from taking it on the chin today. The Dow Jones plummeted over 265 points as investors turned their attention to the real problems facing the United States economy. Growth has slowed in the economy and the high unemployment rate is having an effect. This is causing many investors to flee stocks and run to the bond market. The panicking of the general public has started to make some stocks start to look cheap again.
I have been a longtime shareholder of General Electric (GE) I first started to buy shares when the stock plummeted to $5 back during the financial meltdown in 2008. I noticed that the iconic company was unfairly punished with many other stocks and was reassured of my investing decision when Warren Buffett purchased shares himself.
Shares of General Electric are down to $17 a share. The stock lost 4.3% of its value today. GE saw an uptick in short interest over the last two weeks as big time investors like Doug Kass had targeted the stock. Now that shares have weakened, the stock is trading at its lowest level since December of 2010. General Electric is getting attractive for a number of reasons:
- The stock trades at 13 times this year’s earnings
- The current dividend yield of 3.4% makes GE a solid dividend stock.
- GE Capital has significantly reduced its leverage
- GE has had double digit positive earnings growth for 2011.
- The company is refocused on industrial production.
I would not load up on shares of GE at the moment because I think that the stock may trend lower. Investors could however feel comfortable initiating a position in GE at this price. If General Electric hits $15 a share again I would look to add to my position.
I guess it is like they say, there are opportunities in every market. Good move on picking up GE at $5…or at least starting to buy.
Nothing wrong with starting to dabble in solid dividend stocks while waiting for a recovery. Personally, I wonder whether another recession is in the making and a four-digit Dow is awaiting us this fall. I wouldn’t be a bit surprised to see a similar scenario to 2008.
Great job on picking up GE at $5. I’m still on the sidelines with that one..the dividend cut stung a lot of investors.
The market drop has provided ample opportunity for some shopping on sale!
If GE falls that much in this month (which it looks like its going to) I’ll be buying at least three shares. Thanks for the tip!
I look forward to reading and learning more about stocks from this site!
I have GE and MO as dividend play, I am holding on to them for as long as I could. They are sound companies