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Six Reasons to Keep the Faith in GE

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The road will be bumpy, but worth the ride.

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Shares of General Electric (GE) are trading at a fraction of what they were just a few short years ago. However, they're well off their lows, and there are those that say the good times will soon roll again.

So what's the skinny? And does it make sense to belly up before the earnings?

Here are some of my thoughts:

1. Here's the aerial view: If someone is bullish on the future opportunities this great country has, General Electric is a clear and logical pick. Sure -- that's simplistic, but at the same, it's true. More people with coin in their pocket equals more want for appliances, engines, light bulbs, demand for entertainment, and all those good things GE offers up.

2.
Now, is the road going to be full of potholes? I think so. I think we're going to see fits and starts and I'm skeptical about the near-term outlook for the macro economy, which I've said numerous times in recent months. But this economy will be righted, and things will turn around, make no mistake. And when they do, my gut tells me that GE's shares will soar like Sputnik and there will be legions of people out there kicking themselves and wondering why they didn't belly up to it when they had the opportunity.

3.
As far as the third-quarter earnings later this month, the Street is looking for $0.20 and I think it will beat by $0.02 to $0.04. Of course, I'm more interested in what management will have to say about what the future holds. My sense is that they'll be cautiously optimistic and offer a decent outlook.

4. Looking at some other things, there hasn't been any insider buying as of late. Everybody seems to remember executives bellying up toward the beginning of the year when the shares were languishing under $10. But if one looks back to November 2008, it's interesting to see that insiders bellied up to the tune of 130,000 shares in and around the mid-teens. The fact that I can hypothetically climb aboard and be in a somewhat similar boat gives me some sense of solace.

5. Looking out a bit further, I think the current 2010 estimate of $0.89 will end up being quite conservative. Clearly its early in the game, but that's my gut sense.

6.
What about rumored Comcast (CMCSA) deal for the NBC Universal unit? I'm not sure how that's going to shake out. But at the end of the day, there could be a positive there, too. If it shakes that business loose, some investors may view the company as more focused.

Hey -- have a great day!

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No positions in stocks mentioned.

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