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Thursday, July 13, 2006

Most Widely Traded 48 Hour Clock: GE Ahead of Its Earnings

Stock Tickers: GE, MMM

24/7 Wall St. has begun coverage of the 36 most widely traded stocks, eighteen each from the NYSE and the NASDAQ. Most of these stocks trade over 50 million shares a week. This new feature will highlight each of the 36 stocks at least every 48 hours giving investors fresh infomation and perspective on the companies whose shares are most likely to move the broader markets.

General Electric (GE) is expected to report $0.47 EPS and $35.6 Billion tomorrow morning. Some may be trying to read into 3M's (MMM) earnings debacle last Friday to garner insight into GE. While these have historically been true through time, these companies are looking more and more different. Many have also put GE as the bogey for the S&P 500 Index, although this is also a different tale now.

GE and MMM do have many overlapping areas, but it is possibly now a comparison of yellow and orange instead of green and aqua. MMM blamed mainly LCD related sales as the big contributor, although there are currency issues and you know there has to be other specifics. GE is actually a huge winner from the Boeing (BA) orders as GE is a huge jet engine maker and gets the even more important service contracts; GE also has a huge bump coming from defense and security now; and GE has NBC. These may be enough to offset weakness in others, and these may not. Both companies have massive exposure to Joe Q. Consumer, so if he really is keeping his hands in his pockets at the stores instead of buying at the registers they both have the same exposure there.

The street has been treating GE negatively with the markets over the last 5 days. The shares were off 1.9% from the highs over the last 5 days, although it looks like the shares have been trying to form a base in the $33.00 to $33.50 range overthe last 3 weeks. That happens to be close to a wider base of $32.00 to $33.50 over the last 2 years. Unfortunately, this base level does nothing to help the company fight the argument that GE has been dead money. This stock has had a hard time staying anywhere north of $36.00 for any reasonable time period since 2002.

GE has a P/E of 20.9, compared to a stated 17.6 P/E for the S&P 500 Index. GE has a dividend yield of 3.01% based on trailing dividends and the S&P has a yield of 1.89% based on its trailing dividends. The yield on the 2-year treasury note is currently around 5.14% and the overnight Fed Funds rate is 5.25%. If you want to lump in MMM you have a P/E ratio of 16.7 and a dividend yield of 2.53%.
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