Best Blue Chip: GE

In the spirit of the Winter Olympics, which start Friday in Torino, Italy, The Motley Fool is pitting companies against one another. The writers will outline why their company is the best, and our very own panel of judges will decide the winner after a period of deliberation. Stay tuned for more!

Let's face it: This is a tough competition. ExxonMobil (NYSE: XOM  ) just booked more than $10 billion in earnings. Coca-Cola (NYSE: KO  ) is a Motley Fool Inside Value pick. Altria (NYSE: MO  ) is one of the great stocks of the last 30 years. And there's Johnson & Johnson (NYSE: JNJ  ) .

But don't let any of that small-f fool you. I don't regret taking General Electric (NYSE: GE  ) in this competition. Not for one second. Here's why: It has more to lose than any of the others. And that's bound to make management very, very motivated.

Playing to the crowd
Let me explain. Each Tuesday I write a column called "Who's Buying Now?" because I've come to believe, as legendary investor Peter Lynch does, that insider buying is an indicator of a stock that's expected to head north. Especially if the person behind the wheel -- the CEO -- is the one buying.

Well, that's exactly what GE captain Jeffrey Immelt has been doing. And much more so than the peers he's been pitted against for this Foolish competition:

Company

12-month net CEO buying

Altria

$0.00

Coca-Cola

$0.00

ExxonMobil

$0.00

General Electric

$3,361,987

Johnson & Johnson

$0.00



When your peer shows you the podium
That said, when your peer also buys your stock, it says something deeper. Something like: "Hey, pal, I love my stock and all, but you deserve the gold." Well, OK, maybe not. But it's a stirring endorsement nonetheless.

A.G. Lafley, CEO of Procter & Gamble (NYSE: PG  ) and a member of GE's board, last bought shares in the company in August. Since May he's purchased 6,700 stubs in all.

Gold medal growth
Who could blame him? The General is one of only a few conglomerates able to consistently post double-digit earnings growth. And that's not expected to be much different for 2006: From 13% to 17%, according to management guidance.

That's right, GE is one of only a very small number able to consistently post ever-higher earnings at strong rates, even with its bulging top line.

An inspiring finish
At the same time, the company is getting $8.5 billion to dump its underperforming insurance business. Even if that hurts sales in the short term, history suggests it will boost earnings and margins, and free capital over the long haul. And that's what counts.

As if that mattered to anyone on the Street. The shares have been dumped faster than Elizabeth Taylor at a speed-dating rally and are trading at a 52-week low. Don't think it will stay that way for long. GE's management commitment, growth, and 3% dividend yield are simply too enticing and offer a more powerful combination than any of the others in this admittedly sterling field.

See you atop the podium, Jeff.

More on the battle of the blue chips:

Want market-beating returns? Start with market-beating dividends. At Motley Fool Income Investor, chief analyst Mathew Emmert seeks undervalued, safe stocks that pay you for the privilege of owning them. Take a risk-free trial to find out which firms are powering Mathew's market-beating portfolio. Or subscribe or renew now and we'll throw inStocks 2006, which features our analysts' best picks for the year ahead. All you have to lose is the prospect of a richer portfolio.

Fool contributor Tim Beyers is a sucker for insider buying. So much so that he covers significant insider purchases every week at Fool.com. Check in every Tuesday to see who's buying now. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what is in his portfolio by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.


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