General Electric Stock could have another big year in 2020

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<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "2019 was bumpy for General Electric (NYSE:GE) Share, however, ended with a high grade for the shareholders. The company's share price rose nearly 30% last year. A look back at the past decade shows a different story. General Electric fell off a cliff in 2017 and still has a long way to go before it returns to its former glory. "Data-reactid =" 11 "> 2019 was bumpy General Electric (NYSE:GE) Share, however, ended with a high grade for the shareholders. The company's share price rose nearly 30% last year. A look back at the past decade shows a different story. General Electric fell off a cliff in 2017 and still has a long way to go before it returns to its former glory.

After the Boeing fallout, the stock falls again

Source: testing / Shutterstock.com

However, given the 2019 gains, many investors are wondering whether General Electric is finally making a comeback. Of course, this cannot be answered with certainty. But the stock should recover again this year as long as GE CEO Larry Culp and his team remain on track.

Culp makes the difference

<p class = "Canvas Atom Canvas Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "One of the main reasons why investors have returned to General Electric is the change that Culp has made. His efforts to make General Electric more transparent are one of the main reasons why the mood regarding the stock has improved. Culp has published more information in the company's quarterly reports and an "Insurance Teach-in ”to keep investors updated on the company's progress Insurance business of the company, "data-reactid =" 26 "> One of the main reasons investors are returning to General Electric is because of the changes Culp is making, and its efforts to make General Electric more transparent are an important reason for improving sentiment around the stock has vowed to be as open as possible to investors about General Electric's challenges, a promise he has kept so far, and Culp has released more information in the company's quarterly reports and set up an "insurance teach-in." , which is intended to update investors on the progress of the company's insurance business.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "InvestorPlace – Financial News, Equity Advice & amp; trading Tips"data-reactid =" 27 "> InvestorPlace – stock market news, share advice and trading tips

<p class = "Canvas-Atom Canvas-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "All in all, Culp looks like the right man Job and the investors seem to trust him, this trust doesn't seem to be unfounded either. Culp's promise to be transparent is one thing, but his past actions have supported this feeling. It is also data from natural language processing. The company Amenity Analytics shows that Culp’s Rhetoric on income calls has deceived less than that of its predecessors. It was also classified as less "deceptive" than the average S & amp; P 500 CEO. & Nbsp; "data-reactid =" 28 "> All in all, Culp looks like the right man for the job, and investors seem to trust him. That trust doesn't seem to be unfounded either. Culp's promise to be transparent is one thing , but his previous actions have supported this assessment, and data from Amenity Analytics for natural language processing shows that Culp's rhetoric was less deceptive than his predecessor when it came to winning calls and was also rated as less the average S&P 500 CHAIRMAN.

Culp's compensation is linked to GE's success

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "All is well and good, but I think , the main problem is culp compensation package, Culp's compensation is closely linked to General Electric's share price. If he can increase GE's share price by more than 50% by the third quarter of 2022, he will receive a $ 47 million bonus. If he can raise the stock price by 150%, that bonus will rise to an incredible $ 300 million. "Data-reactid =" 32 "> It's all well and good, but I think the most important problem is Culp's compensation package. Culp's compensation is closely tied to General Electric's stock price: If it does the stock price from GE to third quarter 2022 increase by more than 50%, he will receive a $ 47 million bonus.

Last but not least, shareholders can rest assured that Culp will do everything in its power to add value to GE.

How GE's shares can collect

Raising General Electric's share price is no small feat. The company is battling a variety of headwind situations, including a highly competitive electricity business, high levels of debt, and a worrying cash burn rate as GE Capital continues to weigh on overall business.

While Culp's commitment to revamping General Electric's culture and implementing cost-cutting measures is a good start, it should be noted that some circumstances beyond Culp's control could prevent a General Electric rally.

First, a sustainable GE rally cannot take place without economic strength. While economic data has continued to improve over the past year, 2020 as a whole is a different animal. As this is an election year, important factors such as consumer confidence, business confidence and the stock market could weaken significantly.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "Another factor that could affect General Electric’s turnaround Efforts is Boeing(NYSE:BA) Ability to take his 737 MAX back to heaven. Boeing's MAX aircraft are reportedly costing General Electric around $ 400 million quarterly free cash flow. It is unclear how long Boeing's MAX problems will persist, although some claim that the FAA could start doing test flights On the plane in late January. "data-reactid =" 39 "> Another factor that could affect General Electric's turnaround efforts Boeing(NYSE:BA) Ability to take his 737 MAX back to heaven. General Electric reports that grounding MAX planes by Boeing costs around $ 400 million in free cash flow per quarter. It is unclear how long Boeing's MAX problems will persist, although some claim that the FAA could conduct test flights on the plane in late January.

GE's conclusion

General Electric is certainly not risk-free, but the stock appears to be a good choice for long-term investors who are comfortable with some uncertainties. Culp's proven success as a market leader and its strong incentives to raise the stock make General Electric a good choice. Although General Electric's success depends on the economy, this applies to most industrial companies. The Boeing issue is certainly worth considering, but this issue could be resolved over the next month.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "At the time, Laura Hoy did not hold any position in any of the above securities."data-reactid =" 42 ">At the time, Laura Hoy was not involved in the above securities.

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