Peter Lynch wrote that once companies reach a certain size, their stock has very limited potential. A company like GE simply can’t double their earnings so how can the stock price double?
Here’s an interesting article on GE, a pretty boring stock that hasn’t done much in recent memory. The article recommends spinoffs and I think that’s the way to go – they often create immediate shareholder value.
For example I remember when Eaton (ETN) spun off Axcelis Technologies (ACLS). Eaton shares stayed the same and ACLS were gravy. I don’t see why the same couldn’t happen if GE spun off its real estate or finance parts.
Hey Jim,
I’ve just been shopping for stocks to buy with my IRA contribution, and I thought I’d share some of the stocks I came across.
I screened stocks for low/no long term debt, some dividend (preferably substantial) and a low P/E ratio. What I found:
ALDA: Aldila Golf Co. (club shaft maker)
RAIL: Freight Car America; as well as their competitor ARII: American Railcar Industries (rail car manufacturers)
CHKE: Cherokee Inc. (clothing trademark conglomerate)
FRD: Friedman Industries (steel)
USMO: USA Mobitilty, Inc. (wireles communications)
CAW: CCA Industries, Inc. (skin care products)
MTEX: Mannatech Inc. (nutritional supplements)
Except for the railcar companies (at 0.40-0.50% yield), these companies yield from 2.00% to 3.00% in dividends (with CHKE at 6.80% and USMO at 12.10%). And P/E ratios range from 5 (RAIL)to 15 (USMO).
I bought only the ALDA for its 3.80% dividend and TTM P/E of 8.