Emerging Markets and GE
I've been reading more about GEs business and it really is a mutual fund of businesses including water treatment, energy generation, energy distribution, nuclear energy plant construction, offshore drilling systems, railcar locomotives, as well as NBC of course. Its market cap is second only to Exxon.
The following article http://www.reuters.com/article/tnBasicIndustries-SP/idUSSIN7166820071001
also highlighted the fact that it's emerging market business was growing at double the rate of its US operations and was forecast to grow at 20% a year for the foreseeable future.
I think despite its credit division, this is a good long term play on emerging markets, a falling US dollar, and on energy infrastructure. Most of these themes have been discussed in earlier posts.
posted by Des @ 12/06/2007 10:23:00 AM
3 Comments:
Yes, GE is a fund in disguise. And just like the S&P500 Index, 1/3 of it's earnings (and market cap) come from GE Capital. Right now, from it's stock price movement, it seems the market is not expecting ANY fall-out from the the Credit Crisis. I find it hard to believe they are not going to be affected by the liquidity crunch. They have to borrow short term from other financials to turn over their asset backed paper, don't they? I wish I knew a bit more about this part of their business. So yes, GE is like a fund, but if they miss earnings, it will drop like a stock.
Having said that, I have been looking for an infrastructure/ environment play.
I was also reading that GE Capital's fastest growing segment is their financing of solar/wind projects from their own industrial arm. Yes it would be helpful to have a breakdown of their loan portfolio to see what is at risk.
Did I mention that they have a large wind mill division? They bought it from Enron.
Yes, emerging economies are growing faster than the rest of the world, and no wonder that companies like GE are investing and profiting from it.
But I am not sure if GE is considered a play on emerging markets for us, unless we know what percentage of its revenue comes form emerging countries.
The article only mentions: "... the growth in emerging markets is twice, three times in some cases, that in the developed countries." True, but the questions is how much that affects GE's stock price?
Generally I am fine with investing in GE. But I see that more as a safe mutual fund, which is expected to perform similar to the Dow.
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