Will a Spinoff Help General Electric’s Stock?

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With shares of General Electric (NYSE:GE) trading around $23, is GE an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework.

T = Trends for a Stock’s Movement

General Electric is a diversified industrial, technology, and financial services company that operates worldwide. The products and services of the company range from aircraft engines, power generation, water processing, and household appliances to medical imaging, business and consumer financing, and industrial products. General Electric’s segments are: Energy Infrastructure, Aviation, Healthcare, Transportation, Home & Business Solutions, and GE Capital. General Electric is a leading provider of a wide range of products and many are essential in daily lives of consumers and companies around the world.

General Electric is planning to spin off its store credit card business in a move that follows the conglomerate’s plan to scale back its financial arm in order to focus on manufacturing, according to The Wall Street Journal. General Electric provides store credit cards to 55 million Americans and brought in $2.2 billion last year. People familiar with the matter who spoke to the Journal said that the company is preparing an IPO of the business, as a straightforward purchase would likely face too many regulatory hurdles.

T = Technicals on the Stock Chart Are Mixed

General Electric stock has been flying higher over the pat several years. The stock is currently searching for value near mid-range prices for the year. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, General Electric is trading between its key averages, which signals neutral price action in the near term.

GE

Source: Thinkorswim

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