The case for buying stock in General Electric (NYSE:GE) is based on the idea that its aviation segment will embark on a slow recovery in line with a gradually improving commercial aviation market. Meanwhile, its healthcare segment will continue to generate solid, if unspectacular, earnings growth, and management actions to restore margin in its power and renewables businesses will bear fruit. It's an interesting proposition, but it's going to take time and effort to work, so why not buy some better stocks with exposure to these industries? Here are a few ideas.

Raytheon Technologies is a good value

GE Aviation contends with Raytheon Technologies' (NYSE:RTX) Pratt & Whitney segment in the commercial aviation engine market. Pratt and CFM International (a joint venture between GE and Safran) compete directly on the Airbus A320 Neo, while CFM's LEAP engine is the sole engine option on the Boeing 737 MAX. In addition, both companies have legacy engines on the Airbus A320 family and Boeing 737 -- an important point because the true profit center in aircraft engines is in aftermarket sales and service.

Miniature golden bull and bear figurines on top of a paper showing stock charts and columns of numbers

Image source: Getty Images

Clearly, both companies are hoping that air traffic recovers in good time, but the difference between the two is that GE is more heavily reliant on GE Aviation. The segment contributed $4.4 billion in free cash flow in 2019, and it helped offset outflows elsewhere, leading to GE generating $1 billion in free cash flow from its current collection of businesses.

In comparison, Raytheon generates 55% of its revenue from defense activities, which are holding up well amid the COVID-19 pandemic. Moreover, there's a case to be made that the market is overly discounting its commercial aviation business. 

Putting it all together, if it all goes wrong with commercial aviation, then GE has significantly more downside risk than Raytheon, because the latter will be supported by cash flows from its defense business. Meanwhile, if it all goes right, Raytheon has upside potential. In such a scenario, GE will obviously have upside potential from aviation, too, but it will still need to turn around its power and renewables businesses.

Danaher offers defensive growth

During a difficult year for the markets, Danaher (NYSE:DHR) stock is up 15% as of this writing. The two companies are connected, as GE's CEO, Larry Culp, used to run Danaher. GE also recently sold its biopharma business, now called Cytiva, to Danaher.

The deal is particularly interesting because Danaher looks to have got Cytiva at a great price. The biopharma unit was the growth and cash flow engine of GE Healthcare, and without it, GE is expecting low-single-digit revenue growth for the segment in 2020. Meanwhile, Danaher got a business that is highly complementary to its existing life sciences segment. 

Moreover, Danaher's core markets of diagnostics and life sciences may have received a boost from the COVID-19 pandemic. It's likely to create an extra emphasis on early diagnosis of diseases, as well as research and development into cures and vaccines. As such, investors in Danaher are getting a rare combination of a defensive business with plenty of long-term growth opportunities

TPI Composites, a play on wind power

The industrial giant's two businesses are lumped together here because they are both tied to how electricity is generated by utilities. Indeed, they somewhat compete with each other. GE Power provides gas turbine equipment and services, while GE Renewable Energy provides wind power turbines. At the heart of the discussion lies a debate over whether the weakness in heavy duty gas turbine demand over the last five years indicates a structural decline -- as renewable energy becomes cheaper -- or a cyclical one.

It's hard to know the answer to this question, but we do know Culp believes renewables is a growth business and there does appear to be a significant opportunity for margin recovery and long-term revenue growth in the segment.

Dozens of wind turbines in a field of flowers with the sun setting in the background

Image source: Getty Images.

In this context, a company like blade manufacturer TPI Composites (NASDAQ:TPIC) is interesting. TPI includes all the major U.S. and European wind power companies as its customers: Vestas, GE, Siemens Gamesa, Enercon, and Nordex.

Blades represent nearly 30% of a turbine's value, and TPI believes the trend toward outsourcing blade production to a specialist manufacturer is likely to continue as the overall wind market grows. Moreover, TPI tends to manufacture larger blades, which the market is moving toward. TPI stock gives you a way to benefit from overall growth in the industry even as the leading players continue to battle it out for market share.