You have to admit, General Electric (NYSE:GE) is one heck of a blue chip. And it's good to see it raising its earnings guidance.

The big conglomerate expects its earnings to grow 16% to $0.44 for the third quarter, which is on the high side of its previously stated guidance. GE also stands a good chance of earning a couple of extra pennies for all of fiscal 2005 -- the new expectations are for earnings per share between $1.81 and $1.83, versus the previous range of $1.80 to $1.81. That would represent approximately 14% to 15% growth over fiscal 2004's earnings number of $1.59 per share.

What's even more positive is that GE is expecting some cool green this year. Since cash flow from operating activity should come in at more than $19 billion, the company is comfortable with engaging a more ambitious posture with its stock repurchase program. How ambitious, you ask? How about adding $1 billion for a total of $4 billion in stock buybacks? That sounds pretty nice to this shareholder.

So, let's think about this in valuation terms. If GE earns, say, $1.81 per share for 2005, and is trading around $34 a stub, then its P/E ratio is 18.8. Checking Yahoo! Finance estimates, it looks like the five-year growth expectation for GE is 10.5% per year. Thus, the PEG ratio would be a bit on the expensive side, at about 1.80.

But what if the share price pulls back a bit? Or what if GE can find a way to grow faster than 10.5% per year? In those cases, the PEG would fall and you'd be looking at an even better opportunity to take a position in a solid blue chip. And while today's PEG may look rich, just be glad it isn't up in the stratosphere, like it was during the raging bull market four and five years ago.

That's the thing with blue chips. Oftentimes they sport a rich PEG ratio because the market considers them relatively "safe" investments given their steady growth. I wouldn't necessarily use a high PEG ratio in this case to reject the stock; my strategy for GE is consistent buy-and-hold, with dollar-cost-averaging and reinvestment of dividends.

GE gave its shareholders a nice gift with this positive guidance and upped share buyback, especially in the rocky market environment in which we currently find ourselves because of high energy costs, hellacious hurricanes, and Alan Greenspan's never-ending quest to fight inflation by raising the Fed funds rate. GE's stock also carries a decent 2.6% yield, so the company pays you to be an owner. What more could you ask for?

More Takes on General Electric:

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Fool contributor Steven Mallas owns shares of General Electric. The Fool has a disclosure policy.