I agree with you on those two companies Nick, GE and JNJ are selling at the market at really attractive prices relative to its true value.

It's time to load up the nest egg with great companies...

I would add a third one, PG.  I think GE, JNJ and PG would make good core holdings for most portfolios, and now would be the opportunity to purchase these stocks if they are not already in your portfolio.  There are some stocks that you buy and hold for the long term, and, in my opinion, these three stocks fulfill that requirements. 

GE finally got my vote and my money.  At $30.5 per share, the intermediate term chart says it is unlikely to go any lower.

uh

Before everyone goes jumping on the GE bandwagon because of its apparant low valuation, did anyone check out their projected growth rate for the next couple of years ? I am not saying it is a horrible pick up at this price but I would think in this market there are plenty of companies with a hell of a lot more upside. I also remember a few years ago when GE was at the same price hearing the same thing so let me know if the term value trap sounds appropriate.

 

I concur.  The sad dedication of many individual and institutional investors to GE has caused them to incur really high opportunity costs.  The dividend has in fact been nothing special over most of the past 10 years and growth is expected (by them) to be very modest over the next few years.  Unless one had the foresight to pitch this pup at $42, it's been dead-ish money or worse over the past 5 years.  There are just way too many superior oppotunities in markets to stay with GE -- and I suspect capitulation by disappointed long term institutional holders will either cap the price near here or drive it lower over the intermediate term.  

Dick

S&P gives GE 4 Stars (Buy) with a 12 month target price of $38, which is 25% above its current price.  Four analysts give it a Strong Buy, 2 a Buy and 6 a Hold.

I think the fundamentals indicate it is fairly priced stock suitable for a core investment.  It yields 3.86%, P/E 14.9, '08 estimated earnings 2.21 and '09 earnings 2.50 which gives the stock a PEG of 1.14.  Beta 0.76, Price/Sales 1.76, Price/Book 2.62, ROE 17.4, Return on Assets 2.6, and Return on Investment Capital 5.4..

 

Absolutely correct on all the ratings and projections.  Here's the challenge: find a time over the past 5 years when the ratings and projections were NOT as good or better, when the target price was not here or higher, and GE didn't LOOK like a fairly priced stock suitable for a core investment.

Dick

The last time GE was at its current price level was almost exactly 4 years ago. 

http://www.cnbc.com/id/15837270?q=ge

It is currently near its 52 week low and it is probably as cheap as it ever will be for some time.   You collect almost 4% in a dividend while waiting for the price to rebound.  The dividend is as secure as any AAA bond.  The 5 year dividend grow rate has been 9.2%.

Insiders are net buyers, so they obviously aren't concerned.

GE is currently considering selling the appliance division and probably other units, to streamline the revenues.  This should also help boost the stock as time progresses. 

I am not pushing it.  The point I am trying to make is if you ever wanted to own GE as a core stock, now is probably the time to do it.

 

shovel:

It is currently near its 52 week low and it is probably as cheap as it ever will be for some time.   You collect almost 4% in a dividend while waiting for the price to rebound.  The dividend is as secure as any AAA bond.  The 5 year dividend grow rate has been 9.2%.

GE's dividend is pretty secure, I'd put it on a list of 10 or 20 companies that are least likely to have a dividend cut. But a triple-A bond is certainly more secure.

The current yield is right at 4% as I write this (quarterly payment is 31 cents, and the share price is 30.9). I caution any buyers to not expect very high growth rates over the next 10-20 years. But even with 5%-6% dividend and earnings growth it makes a respectable investment vehicle over the long term.

Regards,

Duane

Again, it is all about expectations. Without a doubt the dividend is safe. Relative to their historical PE which is a good way to value a company, they are reasonably priced. I consider a company with a 1.17 PEG ratio reasonably priced. A company with below 1 PEG is cheap. GE could be considered cheap if you add the diviidend. If you want a low risk low reward decent total return stock, then GE is a nice buy at this price. I seriously doubt that you will see any PE expansion at this level with the fact that the institutional investors have lost confidence in GE. Once you lose confidence it takes awhile for it to come back. Assuming you get say 8-9% earnings growth and the PE stays the same which I think is a logical forecast, then you are looking at a safe 12.5% per year return over the next 3-5 years.

My original premise was in this market, GE was not a good investment. Without a doubt, if the market indexes were at their highs and we were coming off a good year, then at these levels, GE would be an oustanding investment. Considering that over the last 18 months the S&P 500 has a negative return and there are dozens of high quality companies that are beaten up to a pulp, I simply think there are too many other companies where you will get a better than a 12.5% average return over the next few years. There could be a little higher risk in the very short term but at these levels I think it is worth taking.

I hope that I explained things a little better this time.