The year is nearing its end, and now is a good time to look at what happened throughout the year to the stocks you follow. If you know the important things a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it deserves a spot in your portfolio.
Today, I'll look at General Electric (GE +1.44%). As a member of the Dow Jones Industrial Average (^DJI +0.83%), the conglomerate has a long history that dates back more than a century in delivering a wide range of products. Recently, though, the company moved back toward its roots, focusing on energy production through alternative methods like wind turbines. But revenue and earnings have been under pressure over the past year. Below, you'll find more on what moved shares of General Electric in 2012.
Stats on General Electric
|
Year-to-Date Stock Return |
20.2% |
|
Market Cap |
$220 billion |
|
1-Year Revenue Growth |
(5.5%) |
|
1-Year Net Income Growth |
(10.7%) |
|
Dividend Yield |
3.3% |
|
CAPS Rating |
**** |
Source: S&P Capital IQ.
What happened with General Electric this year?
Over the past several years, GE has worked hard to recover from the damage its ill-fated GE Capital division caused during the financial crisis. Prior to the crisis, GE Capital was a gold mine for the company, but ever since, GE has shifted exposure away from the financial arm and toward other parts of its business.
In particular, GE is playing a role in energy production of just about every type. From nuclear reactors to wind turbines and solar-panel manufacturing, GE has greatly bolstered its energy infrastructure segment. Moreover, some argue GE could expand its energy role further. A possible buyout of First Solar (FSLR +1.60%), for example, could help increase its presence in the solar industry.
GE has other ambitious plans outside energy. The company recently decided to start a mining-equipment business, going up against Caterpillar (CAT +0.83%) and other existing rivals in the space. GE is also aiming to help create an "industrial Internet" that allows products ranging from jet engines to utility turbines to monitor themselves and report potential problems to human managers. The initiative could also make certain devices more efficient as they take other information into account.
Still, GE has some concerns to address. The coming surtax on medical devices will have a big impact on its health care division, although smaller, less diversified competitor Intuitive Surgical (ISRG +2.41%) has more concentrated exposure to the tax. In addition, with a big shortfall in pension funding, GE could see pressure on its earnings in the coming years.
By adapting to new conditions, GE has once again proven its staying power. Look for more exciting things to come from GE in 2013 and beyond.
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