August 20, 2012
The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Isaac Pino and research analyst Austin Smith discuss topics around the investing world.
Today, Isaac dissects GE's various business segments, focusing on its fastest-growing business -- transportation. During the second quarter, the transportation unit reported revenue and earnings increases of 27% and 58%, respectively. Apparently, trains are really pulling their weight for the $200 billion behemoth these days. Keep in mind, however, that transportation is a relatively small segment of the company and only snags about 2% of the global market share. Still, railroad traffic is often a reliable indicator of global economic activity, so a steadily growing backlog reveals strength moving forward in this otherwise cyclical business. GE's stock has historically been tied to economic growth (it's more closely correlated with the S&P 500 than any other stock), but these days management seems confident in double-digit gains regardless of the dismal European economy. Find out in the video below why Isaac and Austin have both invested their own hard-earned cash into GE in recent months.
For GE, the recent financial crisis struck a blow, but management took advantage of the market's dip to make strategic bets in energy. If you're a GE investor, you need to understand how these bets could drive this company to become the world's "infrastructure leader." At the same time, you need to be aware of the threats to GE's portfolio. To help, we're offering comprehensive coverage for investors in a premium report on General Electric, in which our industrials analyst breaks down GE's multiple businesses. You'll find reasons to buy or sell GE, and you'll receive continuing updates as major events unfold during the year. To get started, click here now.