General Electric is the IBD Stock Of The Day Tuesday and was added to SwingTrader Monday. GE stock has rallied nearly 76% so far in 2023 and is trading at its highest level in over five years.
GE stock is near a new breakout and flashing buy signals, helped by woes at rival RTX.
The S&P 500 conglomerate is on its way to becoming a pure aerospace play by early next year as part of its breakup strategy. General Electric is splitting into independent energy, health care and aviation companies in 2024 after shedding various assets ranging from lighting to locomotives. In January, the company spun off GE HealthCare Technologies, which trades on the Nasdaq.
General Electric's aerospace segment — sometimes referred to the company's "crown jewel" — manufactures jet engines and aviation systems for the likes of Boeing. Its aftermarket business offers repair and maintenance services.
GE Aerospace saw an increase in demand this year with the jet-engine segment reporting double-digit growth in orders, revenue and operating profit in its Q2 beat-and-raise report. Commercial and defense engine sales grew for the quarter, while commercial services rose on increased spare-part sales and internal shop visits as travel rebounded in the first half of the year.
General Electric's earnings increased by double digits in the past three quarters while the company's sales growth accelerated in the last four quarters.
GE plans to spin out its renewable-energy business, named GE Verona, early next year.
Is General Electric Stock A Buy Right Now?
Meanwhile, aerospace rival RTX, formerly known as Raytheon Technologies, struggles with a major engine issue. RTX announced its Pratt & Whitney unit discovered a manufacturing defect in powdered metal used to make engine parts in its Q2 earnings beat in July.
The issue impacted hundreds of engines powering A32neo commercial planes made by Airbus. RTX announced 200 accelerated inspections for engines by mid-September. But on Monday, the company said it expected to pull 600 to 700 engines for inspections from now until 2026.
RTX said an average 350 planes could be grounded per year through 2026. As many as 650 jets could be out of commission in the first half of 2024. RTX expects the recall to cost up to $7 billion, with up to a $3.5 billion hit to pretax earnings over the next several years, including up to a $3 billion impact on pretax results for Q3.
Elsewhere, Morgan Stanley raised its price target on GE stock to 125 from 122 in a mid-August research note and maintained an overweight rating. The firm called General Electric "one of the best defensive names in our coverage" amid the uncertain macroeconomic environment.
GE Stock
Shares rose 0.65% to 115 in Tuesday's trading, extending Monday's bounce off the 50-day line, but backing off an intraday high of 116.82.
GE stock is trading in a flat base with a 117.96 buy point, MarketSmith data shows. The buy zone, which stretches 5% beyond the buy point, extends to 123.85.
The stock is actionable following a bounce from its 50-day moving average after breaking a downward-sloping trendline. Shares are hitting resistance around another early entry opportunity at 115.85.
GE has a 94 Composite Rating out of a best-possible 99. The Composite Rating combines various technical indicators into one easy-to-read score. Shares have a 76 EPS Rating. General Electric's relative strength line is near 52-week highs, and the stock has a 96 RS Rating.
GE stock has ascended 75.9% so far this year and is trading near its highest level since early 2018.
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