Every athlete knows that how demoralizing a protracted slump can be -- and how good it feels once you break a streak of underperformance. I imagine General Electric
The comeback isn't perfect
GE may have broken its streak, but it hasn't made a perfect comeback. A week ago, I wrote: "If GE meets or exceeds [analyst] estimates -- for the right reasons (watch the top line) -- it could indicate that economic activity is holding up better than expected." Unfortunately, GE's revenue decreased year-on-year and was short of the consensus estimate.
This was not merely a result of shrinking GE Capital (its lending arm), either: Revenue was down across a broad swathe of the firm's businesses, including in the Energy Infrastructure, Aviation, and Transportation segments.
Mixed signals
Still, extrapolating those results to the broader economy is no sure thing: GE's revenue miss conflicts with the strong revenue performance of two other bellwether stocks this week: Alcoa
At 13.4 times the next 12 months' estimated earnings, GE's price-to-earnings multiple is surprisingly equal to that of the S&P 500 index for a company that is unambiguously above-average. That looks consistent with a strong theme: high-quality stocks offer some of the best opportunities in today's market.
Beyond GE: Better opportunities
Nevertheless, at similar multiples, I prefer 3M
One of the hallmarks of a high-quality stock is a sustainable, above-average dividend. Jordan DiPietro has identified the best dividend stock. Period.