IBD stock analysis
- Bounce from 10-week line after November breakout.
Industry group ranking
* Data not in real time. All data shown was acquired at 2:53 PM EST on 12/14/2022.
General Electric (GE) is tracking an aerospace rebound, with a slew of new orders for industry leaders such as boeing (BA) emphasizing an improvement in prospects. GE stock was teetering in a buy-it-yourself situation Wednesday.
General Electric operates four main business units. The Aviation unit designs and manufactures aircraft engines and various systems for commercial and military applications. Healthcare manufactures various diagnostic and patient monitoring equipment.
Renewables offers a wide range of generation, transmission and storage components and systems. GE’s Power segment focuses on power generation technologies including gas turbines, steam generation, and nuclear power.
In 2021, aviation accounted for nearly 29 percent of the company’s $74.2 billion in overall revenue. Healthcare was nearly 74%. Renewable energy was 21% and power nearly 23%.
Dividing Edison’s legacy
In July, General Electric announced it would split into three publicly traded companies in 2023-24: GE Aviation, GE HealthCare and GE Vernova, which will combine its electric power and renewable energy businesses. The company said it tentatively plans to execute the spin-off in early 2023.
It will be just the latest permutation of the 130-year-old company, originally formed from companies owned by Thomas Edison and consolidated into the Edison General Electric Company.
GE halted a series of five-quarter earnings advances in the third quarter, posting a 39% drop in earnings and a 2.8% increase in revenue. The earnings number beat analysts’ goals, while revenue was better than expected.
For the full year, GE expects earnings per share of $2.40-2.80, down from its initial forecast of $2.80-3.50. Analysts polled by FactSet provide a consensus estimate of $2.56 for the year versus $1.78 in 2021 and just 14 cents in 2020.
GE Stocks: A bounce off support
A two-week pullback on Monday brought GE stock to a quick touchdown on its 10-week moving average. The bounce from that line presents a subsequent buying opportunity.
A bounce off the support is not a good place to open a new position. But the rebound could help investors who bought during the stock’s early November breakout from a bottom basis. GE hasn’t climbed 9% since that breakout, then lost its breakout verve.
A move above Tuesday’s high of 84.90 would offer a specific trigger, breaching the 21-day line and breaking a short trendline while still staying close to the 10-week line.
The shares fell just below the buy point on Tuesday, technically triggering a sell rule, but not the automatic stop loss rule.
It’s always best to pyramid a stock on a bounce. In this case, there is a chance that GE stock will consolidate and form a base-on-base pattern.
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