In these waning days of 2011, there's a chill in the air and snow in the forecast. What better time of year to curl up by the fire and ponder: What went wrong with the stocks you picked back in January? What went right? And should you keep these stocks in your portfolio, or go out and find something new?
That's what we aim to do today, as we flip back the calendar, and consider the year that was at General Electric
A few Foolish facts about General Electric
| Year-to-Date Stock Return | (5.4%) |
| P/E | 13.9 |
| Dividend Yield | 4% |
| 1-Year Revenue Growth | (4.2%) |
| 1-Year Profit Growth | 8.3% |
| CAPS Rating (out of 5) | **** |
Source: Motley Fool CAPS.
What happened at General Electric this year?
There's no two ways about it: 2011 has not been a good year for GE stock. As the Dow Jones Industrial Average ekes out a small gain for the year, GE's still mired in the red, lagging the performance of its home index by a good 6 percentage points. And yet, I can't help but wonder if this "underperformance" masks something deeper, and better, going on behind the scenes at GE. Let's review.
Probably the biggest hurdle GE had to overcome this year was the legacy of its ill-fated move into commercial lending. The company was burnt to the tune of billions of dollars worth of losses by this gaffe. GE took significant steps to extricate itself from the business in 2010, and now plans on accepting online retail deposits that it hopes will cover its commercial lending and leasing business in North and South America.
Then, deftly doffing its banker's green eyeshade in favor of an oilman's hardhat, GE got back to what it's always done best: Building things. Making things. Creating real products for real people. In a series of acquisitions begun (again) in 2010, the conglomerate had already cobbled together an oil and gas equipment empire to rival the likes of Schlumberger
GE: Imagination gets back to work
And yet, as we've seen this year, this was just one mission of many. You've probably heard about GE's landmark deal to purchase 25,000 electric cars from General Motors
You see, GE isn't just buying electric cars to build up its "green" credentials. It's not doing this because "Electric" is part of its name, either. What GE really wants to do here (I believe) is to place itself at the forefront of a new industry -- and build a new infrastructure of electric car charging stations to support it. To my way of thinking, GE's purchase of 25,000 e-cars was therefore an acceptable "loss leader" -- an investment made to help jump-start the industry. The move was aimed at providing some financial support and incentives for carmakers to keep the faith and keep trying to convert consumers to the concept of driving electric cars.
Next step: world domination
GE could now be looking at a great way to grow going forward: reinventing the way America drives to work. Seeing as it's already made a billion-dollar commitment to the project, I wouldn't be too surprised to see GE deploy even more of its $30 billion "reinvention fund" to support its latest move -- by rolling up smaller, competing e-charger-makers like AeroVironment, for example, or perhaps taking a stake in e-car pioneer Tesla
In fact, GE is already making unconventional moves in this industry. Just last week the company announced it's teaming up with Amazon.com
Then again, maybe that's how imagination works. Here's hoping GE can make it work for its shareholders in 2012.
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