I’ve Bashed This Stock For Years — But Now, Things Have Changed…

Many of you know that my Maximum Profit service utilizes a system that’s based off of two momentum indicators (one technical and one fundamental).

One of the nice things about a system like this is that it puts stocks on your radar that you either don’t know about or would never have considered in the first place. This is important, since we often let our own human bias get in the way of our objective — making money.

The reason I bring this up is because a few weeks ago my system alerted me to a name I did not expect to see…

In fact, it’s been a favorite poster child of mine for why a “buy-and-hold” strategy can damage your investment performance.

As recently as last August, I used this stock as an example of how buy-and-hold can sometimes really hurt investors. In fact, after 25 years of holding this stock, investors didn’t make a dime. Nada. Zilch.

I’m talking about General Electric (NYSE: GE).

Now, the stock is showing strong momentum. In fact, it’s practically done nothing but go up since last October. We’ll get to why I think that is — and why the times may have changed in just a moment…

The Dangers Of Buy-And-Hold…

But first, I want to remind readers of what I said about GE back then:

I’m going to show you a chart that is going to blow your mind. You see, GE shareholders have been treated to some of the worst volatility I’ve ever seen over the past 25 years. I even had to adjust this chart to a log scale so you can truly understand how wild of a ride it’s been…

This is what anyone who has held on to GE shares for the past 25 years has been subjected to.

Is there any individual investor alive with guts like that? If so, I’d like to meet them…

In an ideal world, we’d buy a stock and hold it for years, and make a ton of money. But it doesn’t always work out that way. This is why it’s important to not box yourself in to one particular market dogma. Even the king of buy-and-hold, Buffett himself, doesn’t always hold a stock forever. If it turns out to be a bad idea, he dumps it and moves on.

The point is, we need to keep an open mind when it comes to investing. And so with that in mind, I’m doing just that when it comes to GE — a company I’ve ragged on for years…

This nostalgic company was founded by the likes of Thomas Edison and J.P. Morgan in 1892. And for decades, it created massive wealth for investors.

Then for decades, the stock didn’t go anywhere as mismanagement, bloated liabilities, and a poor acquisition strategy weighed on the stock. But now the company has shed some of that dead weight and is shoring up operations. It’s turning back into a profitable company that churns out cash flow.

GE Has Some Serious Momentum

GE’s renewed focus is on its Aerospace, Healthcare, and what it dubs its “GE Vernova” segment, which is its renewable energy and power division.

The Aerospace segment is its biggest, accounting for 35% of total sales, while Healthcare makes up 25%, GE Vernova does 22%, and “Other” makes up the rest.

In 2022, GE did over $76.5 billion in sales, a slight 3% increase over the year prior. As the company winds down some of its former operations, revenue will decrease in the years ahead, but margins and profits should expand.

We are already seeing cash flow grow… Last year, it produced over $5.9 billion in cash flow, a 78% improvement over 2021.

Much of the stock’s momentum comes from the company shoring up operations and improving profits and margins. Also responsible is its focus on two industries that are seeing strong growth: Aerospace and Renewable Energy (aka GE Vernova).

Its Aerospace segment saw sales jump 25% alone last year over 2021. And while GE Vernova saw a slight decrease in sales, the renewable energy trend is strong and growing, and GE aims to be a leader in the space.

This has combined to help shares reach new 52-week highs and remain strong despite the recent market volatility.

Action To Take

A slowdown in GE’s Aerospace division would likely hurt shares. This could be caused by cuts in the defense budget or lower orders for commercial aircraft.

With that said, the stock comes in with incredible momentum. It’s generating a ton of cash flow. This slimmed down version of GE may finally be the real deal. Time will tell.

Over at Maximum Profit, we have set profit targets where we will pull gains off the table. And we will use a 12% trailing stop loss to manage our risk. If you’re interested in trading this name, you may want to do the same.

In the meantime, if you’re looking for picks with major upside, check out my investment predictions for 2023…

While we don’t have a crystal ball, many of our past predictions have come true, allowing investors the chance to rake in gains of 622%, 823%, and even 1,168%.

From the U.S. dollar to driverless trucks to breakthrough cancer treatments and more… If you’re looking for some “home-run” ideas for your portfolio, go here to learn more.