Should Industrial Be a Sector Leader

The stock market has had a number of leaders but recently the defensive healthcare sector has led the way higher.  With growth prospects poised to increase, industrials could be the next sector that leads the major averages on their next leg higher.

General Electric GE, is a robust industrial that could be a leader for those who believe economic data will continue to improve throughout the first quarter.  The company operates as an infrastructure and financial services company worldwide.

The stock is attempting to rebound from the January decline, but it has been lagging the broader market. Recently the company announced that it intends to splash $10 billion in clean energy research by 2020. The focus will be on wind energy as well as exploring the use of capture-use-recapture CO2 systems.

The 52-week range of GE is $ 21.11- $28.09, and the stock hit a 52-week high in December 2013.  Earnings per share increased 20% quarter over quarter. The three year growth rate of earnings was up 8%. Sales increased 3% quarter over quarter and the three-year growth rate of sales was down 1%. 

There have been recent insider purchases of the stock which should give investors’ confidence. The Chief Executive Officer Jeff Immelt purchased nearly 105K shares of the company stock on March 3, 2014 for total proceeds of 2.6 million dollars.  There were no insider sales of the company stock in 2014.

The stock price has pushed through resistance levels near the 50-day moving average at $26.  The next level of target resistance would be a test of $28.  Former resistance is now support near 26.  Momentum is positive with the MACD (moving average convergence divergence) index printing in positive territory with an upward sloping trajectory.  The RSI (relative strength index) is printing near 60, which is in the middle of the neutral range.