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PreMarket Prep Stock Of The Day: General Electric

March 4, 2021 4:35 pm
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PreMarket Prep Stock Of The Day: General Electric

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

Over the last few weeks, there has been a clear rotation in stocks from growth to value. Although General Electric Company (NYSE; GE) is not what it once was with regards to value, it is certainly not a growth stock. Its price action in Thursday's volatile session makes it Benzinga's PreMarket Prep Stock of the Day.

GE's Horrible Relative Performance: Any way you slice it, GE has been an underperformer in the greatest bull market of all time. Perhaps the best comparison can be made from the March 2009 low in GE stock and the S&P 500 index.

Who can forget the index’s low at 666.79 and GE’s low at $5.51? 

With the cash index at 3,760 today and GE at $13.40, the numbers speak for themselves.  

See also: How to Buy GE Stock

The index has returned 463%, while GE has returned 160%, with much of that appreciation coming in the last five months.

Getting Off The Mat: Through downsizing, reducing dividends and expenses and disposing of valuable assets, GE has slimmed down the balance sheet.

By reducing debt and paying fewer people, more of GE's earnings have trickled down to the bottom line. 

After going nowhere from its March 2020 close ($7.94) to its October 2020 close ($7.42), GE caught a bid in November that has carried over into 2021. The recent stampede out of growth into value has been a boon to the issue as well.

Did Morgan Stanley Top Tick GE? Before the open Thursday, Morgan Stanley maintained an Overweight rating on the issue and raised the price target from $13 to a Street high of $17.

That instigated a much higher open for the issue ($13.88 vs. Wednesday’s close of $13.44).

GE Price Action: After clearing out the institutional sellers at $14, GE could only get to $14.13 before sharply reversing course.

That high came in between its just above its June 2018 high ($13.88) and July 2018 high ($13.74), but well shy of its May 2018 high ($14.99).

Trapped longs on the breakout and a weak market nudged the issue from firmly in the green to in the red in afternoon trading. 
GE shares recovered to close Thursday's session 0.97% higher at $13.57. 

GE Moving Forward: Who knows? With this issue, which quite some distance from its nearly three-year high and a weak tape for now, a short-term top could very well be in place.

For investors looking to sell on weakness instead of strength, the trio of lows at the $13 area is an area to focus on with continued weakness in the issue.


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