Tag Archives: Electric

Tesla's electric motor shift to spur demand for rare earth neodymium
March 12, 2018 6:04 pm|Comments (0)

LONDON (Reuters) – Tesla’s shift to a magnetic motor using neodymium in its Model 3 Long Range car adds to pressure on already strained supplies of a rare earth metal that had for years been shunned because of an export ban by top producer China.

FILE PHOTO: A Tesla Model 3 is seen in a showroom in Los Angeles, California U.S. January 12, 2018. REUTERS/Lucy Nicholson/File Photo

Efforts by governments around the world to cut noxious emissions produced by fossil fuel-powered cars is driving demand for electric vehicles and the metals used to make them, such as lithium and cobalt which are key ingredients for batteries.

Now the spotlight is on neodymium. Several auto makers already use permanent magnet motors that rely on the metal because they are generally lighter, stronger and more efficient than induction motors that are based on copper coils.

But it is the switch to neodymium by Tesla, an auto maker that has staked its future solely on the electric vehicle, that is showing the way the industry is moving and the direction of demand for the rare earth metal.

Research group imarc estimates the market for the neodymium-iron-boron magnet used in the motors is now worth more than $ 11.3 billion, with demand for the magnets rising at a compound annual growth rate of 8.5 percent between 2010 and 2017.(For a graphic of Neodymium market balance click reut.rs/2FD6bUb)

“Some electric car motors use the permanent magnet technology, probably the most famous is the Tesla Model 3 Long Range. All the other Tesla models — Model X and Model 3 standard — use induction motors,” said David Merriman, a senior analyst at metals consultancy Roskill.

Global demand of 31,700 tonnes for neodymium last year already outstripped supply by 3,300 tonnes, he said. Demand was expected to climb to 34,200 tonnes this year and 38,800 tonnes in 2018, leaving larger deficits.

“Tesla’s decision to switch to permanent magnets has completely changed the dynamics of the market,” said a source at a fund manager that specializes in metals.

The price of neodymium is now about $ 70 a kg, well below the $ 500 hit after China held back shipments to Japan in 2010 during a row over disputed islands but it is still 40 percent higher than at the start of 2017.

(For a graphic of neodymium prices click reut.rs/2DlOHtE)

China, which resumed neodymium exports in 2015, imposed strict export quotas across a range of rare earth metal in 2010, saying it wanted to curtail pollution and preserve resources.


“People seem to have forgotten China’s export ban. It could happen again. China is really the main producer, no one else has invested as much in rare earths,” a rare earth trader said.

Despite their name, rare earths are found in many places around the world, but the process of extraction is difficult and expensive, as it requires separating multiple different metals from a single deposit. This is unlike the much simpler process, for example, of recovering copper from ore.(For a graphic of Rare Earth Producers click reut.rs/2Fu5HnE)

China has invested heavily in the rare earth metals process but its crackdown on mining, smelting and other polluting industries is forecast to slow supply. It already helped push the neodymium price to a two-year high of $ 96 in September.

“Rare earth production is as bad as you can get in terms of environmental damage,” the trader said. “China used its dominant position before, what’s to stop it doing so again?”

Such supply concerns are encouraging automakers to search for ways of cutting down neodymium use. Toyota Motor Corp (7203.T) said last month it had found a way to cut use of the metal in electric motors by about a fifth.

The Japanese firm said it had developed a magnet which replaced some of the neodymium with more abundant and cheaper rare earths — lanthanum and cerium. Toyota aims to use the magnets in electric vehicle motors within the next 10 years.

Other manufacturers of electric vehicles that use permanent magnets include BMW BMWG, Nissan (7201.T) and Geely (0175.HK).

Several companies produce rare earth metals outside China, including London-listed Rainbow Rare Earths (RBWR.L), Canada-listed Namibia Rare Earths (NRE.V) and Australia’s Spectrum Rare Earths (SPX.AX).

But, for now, auto makers making permanent magnet motors remain heavily reliant on China, which according to Roskill accounted for 85 percent of global output of rare earth oxide estimated at 161,700 tonnes in 2017.

Morgan Stanley analysts estimate electric vehicles will total 50,000 units in 2020 or 2.3 percent of the total, rising to 400,000 in 2025 or 17.4 percent, and 975,000 in 2030 or 40.9 percent.

Reporting by Pratima Desai; Editing by Veronica Brown and Edmund Blair


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General Electric: The Crazy Ex-Girlfriend I'm Now About To Marry
December 30, 2017 6:00 am|Comments (0)

I hate loving General Electric (GE), its like an ex boyfriend/girlfriend that broke your heart.

Each time you go back, you tell yourself it will be different… they have changed! Yet every time you go back, they break your heart again.

This has now happened to me twice with GE. In 2008, I was riding high, having bought GE in the mid 20’s in 2004, with the promise of an industrial revolution. The finance division was booming and I was up a cool 50% and thought I had found the one!

Then I found out they were cheating on me with someone named subprime! It nearly bankrupted the company, and Uncle Warren had to come to the rescue to save it.

I was frankly, lucky to get out when I did, selling mid panic in the low 20’s. The end result was a 4 year investment that returned roughly negative 20%. I vowed to never make that mistake again…

In early 2015, it was as if GE sent me a text saying… “I miss you… lets get lunch to catch up?” and unfortunately for me, I hit reply. And just like that, we were back together.

The stock had been consolidating all year, and Jeff Immelt had on his shiniest used car salesmen hat, singing sweet nothings into my ear of buybacks, the disposal of the finance assets and refocusing on core industrial operations.

Blah, blah, blah! Next thing I know, this pretty little stock I re bought at 24 and had me sitting on 35% gains, gets cut in half… Apparently the company had a nasty secret spending habit they hid for years and years.

Chart GE data by YCharts

So I had a decision to make mid 2017, do I bail again and take another 20%+ loss? Is this stock destined to break my heart again and again until nothing is left?

I did some soul searching… deep in the woods. And had decided again to leave, never to return.

But as I was leaving the door, with my bags packed, and my prized, signed picture of the Jamaican bobsled team in toe, an event made me hit the pause button.

Jeff Immelt had decided to “step down.”

This left me in a holding pattern for months, until Nov 13th. When new CEO John Flannery issued 2018 guidance that was, lets be kind and just say disastrous. Lowering even the lowest of bars for 2018 to EPS of $ 1-$ 1.07.

So, why am I still a holder of GE stock?

To squeeze some more juice out of my “ex” metaphor, GE just checked itself into rehab!

It now realizes it has a serious problem, it has overspent and or had disastrous timing on virtually every major deal it has done in the last 10-15 years. Alstrom, check. Oil assets, check. Finance disposal, check. Buyback, check.

Mr Flannery appears to not need a second corporate jet to follow him around “just in case” unlike Mr Immelt. He also seems to be dead set on costs, which with GE in its current structure will keep him busy for a while.

Why not close your position?

You think I am crazy don’t you, why in the world would I consider keeping or perhaps doubling my position in a stock that has done nothing but hurt me?

The reason is pretty simple, all of the dirty laundry appears to be in the open now. No more secret spending accounts or ill researched / timed acquisitions (for now). Mr Flannery has all but told anyone that will listen that the rest of 2017 and all of 2018 will suck, and to not invest.

He didn’t “kitchen sink” an earnings report, he lit the whole house on fire.

Source: Meme Generator | Create Your Own Meme

Mr Flannery has called for a new approach to doing business at GE and more importantly to transparency, apparently not subscribing to Immelt’s pyramid scheme like approach to GE’s cash flow. He has acknowledged the pension shortfall, which I am sure will come up in the comments section of this article. Also shrinking the board from a frat house of 18 to a GE focused 12, preaching honesty (imagine that) and accountability in the new GE.

So far I am digging the new CEO and currently am in tacit agreement with his broad outline.

What was the new CEO given to work with?

I’m glad you asked! GE in my opinion has a very strong set of business’s to work with, below I have outlined the 6 major divisions it currently operates.

Power- GE’s power business is huge, with an installed base in every major country in the world. They claim to produce 1/3rd of the worlds electricity through gas, steam and nuclear turbines. This is a core division for GE, and one that recently has helped drive them directly into a ditch, as overcapacity, technical issues and in my view an ill timed Alstrom acquisition weigh on earnings at the division.

However, GE power does have many redeeming qualities. They are a technology leader in the industry whilst having deep relationships with customers in a field that honestly does not have all that many options. Near term however, look for deep cuts in expectations at the unit until the smoke clears.

Aviation- The companies Aviation segment has been a bright spot in recent results, with continued wins and new product introductions, for example LEAP, its new narrow body engine that from what I can find is truly state of the art, with a 15% fuel improvement, increased reliability, weighs 500 lbs less and is 3D printed (which, lets face it, is just cool!)

This division looks set to continue to preform well in the near term and may be looked at as an example for the rest of the company.

Transportation- The transportation segment is mostly composed of GE’s rail assets and is thought to perhaps be on the chopping block for divestiture. They build locomotives with a large portion of revenue coming from the services side of the business, which is something I like to see. They are a global leader in the industry and the mix of technology and services is impressive.

However the division has been lackluster of late and the strategic fit is questionable and thus may not make sense for them to keep. They did just win a 200 locomotive order from Canadian National Railway (CNI) but it may be prudent to offload this asset to focus on core business.

I sort of hate to see this business go, as it truly is world class. However GE hopefully will use proceeds here to either reduce debt or shore up the oft cited pension shortfall.

Healthcare- GE has a broad and diverse set of healthcare assets, providing imaging, healthcare cloud, cardiology, orthopedics and anesthesia equipment, among multiple other products and services.

This has been a strong performer for the company and what I would consider another core holding of GE, this division looks to be a good fit with its digital offerings and will likely continue to buoy the company during this current slump.

BHGE- This is a division that really makes me mad, and I struggle to remain calm in my writing. Jeff Immelts timing was so bad that it feels like it was on purpose. Immelt decided to buy a bunch of oil services companies, seemingly at the absolute top of the oil market. Grrr.

Anyways, GE Baker Hughes as it is now called is the 2nd largest oil services company in the world and to be fair is actually a very good company, and is a technology leader in the industry along side Halliburton (HAL). So basically it is the second prettiest girl in a leper colony.

Oil services, seem in my opinion to be stuck in a pretty serious long term rut and GE, I believe will look to dispose of this asset likely through a spin off off or divestiture of its stake rather quickly. Perhaps GE could offer Immelt a stake in this spin off in return for the GE stock he so graciously awarded himself during his charade.

Renewables- The renewables division is home to a world class wind energy turbine manufacturer, along with in my opinion is the most valuable part, its services segment. GE has established itself as the worlds number 2 wind turbine company behind Vestas Wind Energy (OTCPK:VWDRY). The company also has an emerging offshore wind and hydro power segment that are lacking scale currently, but hold long term promise.

The wind market this year has suffered from intense competitive pressures thus dragging results, however this also looks to be a core division for GE in the future.

So why am I sticking with GE this time – and may be looking to “pop the question” soon?

The companies potential is just so damn pretty! GE lines up well with my vision of the mega trends of the future.

In my mind, a company must both show an ability for growth, while possessing a solid balance sheet with operating discipline from which to build. Under Mr Immelt, GE, in hindsight obviously stood much closer to the crazy side of Mr Barney Stinson’s famed graph below.

Source: FANDOM

Mr Flannery seems to be dead set on adjusting the results of the above graph.

After the dust settles from the recent house fire Mr Flannery has set ablaze, I am envisioning 4 major divisions of GE remaining. Power, Aviation, Healthcare & Renewables.

All 4 remaining divisions fit into my vision- with 3 qualifying in my mind as mega trends. Power, Aviation & Renewables.

Healthcare I view as a great business as well but does not fit as a mega trend in my book with so many unknowns as to the future in the industry.

Power- Power is (obviously) a key need for the future as more and more countries look to move to gas powered plants and away from coal. With the world estimated to need an additional 50% more electricity in the next 20 years, perhaps adding dramatically to that if the electric car revolution is indeed realized.

GE is in great shape position wise in the industry and once the fat has been cut, along with a renewed focus on execution, this division should prove to be a key driver of profits for decades to come.

The below graph shows an estimate of the worlds need for energy into 2035.

Source: Breaking Energy

Aviation- This division looks to be in the midst of a multi decade run, as the world continues to be more interconnected. Importantly the Asian travel market is in the early innings of what looks to be a spectacular expansion. GE I believe is in the drivers seat in this industry, both in technology and services.

My one worry is the Chinese looking to enter this market with “homegrown technology” which I believe is code for stealing IP and re packaging it. However manufacturing jet engines is an entirely different animal from copying an iPhone and progress on a Chinese engine that is both safe and accepted is likely a few decades off.

Source: Airbus Home

Healthcare- This industry as a whole, especially preventative medicine in my view will swell massively in the next few decades. I am going to lose a few followers over this i’m certain but I believe universal healthcare in the United States is pretty much a sure bet sometime in the next 20 years. Which would be good news for GE!

Keeping costs down will likely be a key requirement of any future health system, and with GE’s expertise in imaging for preventative medicine and its emerging analytics and software offerings, it may be able to play an important role in the health systems future, however uncertainties do exist as to the nature of cost controls and the potential for margin compression in all things health related.

Committee for a Responsible Federal Budget

Renewables- I am firmly on the alternative energy bandwagon and GE’s positioning in this industry appears very ideal. Wind energy by most measures is already roughly equal in cost per MWh to current fossil fuel plants, this will likely get better with time, and with offshore wind and hydro picking up steam in both efficiency and scale for GE, will open further avenues of growth for this division.

Alternative energy is here to stay, and GE looks to be on a path that requires no subsidies, a major pitfall to solar currently. The downside to wind energy could be the commoditization of wind turbines, however I believe that GE has the technology and service capability to differentiate themselves in this rapidly growing industry for decades to come.

Source: U.S. Energy Information Administration (NYSEMKT:EIA)

So will I say “I do”?

GE has burned me… Badly in the past, and I must say I am rather gun shy about committing to a perhaps multi decade long marriage to the stock.

But she is so damn pretty!

Source: Meme Generator | Create Your Own Meme

My plan “as of today” is to keep my current position, roughly 2.2% of my equity portfolio in GE for the first half of 2018, to test the waters, if you will, of the new CEO. If I continue to like what I am seeing and the valuation seems fair, which I view it to be currently (a forward PE of 17ish) I may step up to the plate and double my position in the company.

Or maybe I won’t, and I will just run like heck and never come back!

GE: “Hey you, what’s up”

Me: …

Author’s note: If you enjoyed this article and would like to be notified of my future articles, please hit “follow” next to my name at the top of the article to receive notification of future articles I publish.

Disclosure: I am/we are long VWDRY, GE.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.


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General Electric Winning Multiple Contracts Is A BUY At 6-Year Lows
December 24, 2017 12:59 pm|Comments (0)

Yesterday’s contract win by General Electric (NYSE:GE) from Canadian National Railway Co (NYSE:CNI) for 200 locomotives went mostly unnoticed by the market and the news media outlets as the country geared up for the Christmas Holiday. This is one of many recent positive developments that have been ignored by the market as year end tax selling has kept downward pressure on GE along with the doom and gloom that has the stock trading at a 6 year low.

The demise of GE (NYSE:GE) in my opinion is to say the least overblown. Yes the company is having issues with their energy division. Yes they cut the dividend by 50%, Yes the stock is down 46% YTD. Yes there is year end tax selling.

Is there any reason to buy GE at all? I guess that all depends on your tolerance for risk and ability to handle a possible 10% downside from capitulation level lows reached a month ago at $ 17.46 and the recent low on Thursday of $ 17.36, the same day the tax reform bill passed.

GE is out of favor and in the dog house, this is a secret to no one. However it is my belief that GE will be turning the corner much sooner than the market is forecasting. The last six weeks have seen the stock trade in a tight range as the market searches for the ever elusive multi year bottom.

I bought more Friday at $ 17.41,adding to a heavily long position in the stock.

Here are a few headlines that you may have not heard about or seen over the last 30 days that should have moved the stock in a positive direction.

General Electric: CN (CNI) says will acquire 200 new locomotives over the next three years from GE Transportation to accommodate future growth opportunities and drive operational efficiency across its system

From briefing.com TODAY

The locomotives will be produced at the GE Manufacturing Solutions facility in Fort Worth, Texas beginning in 2018. CN’s order is the largest among class I railways since 2014. The first units are expected to be delivered in 2018 with the balance delivered in 2019 and 2020.

GE scores its largest Renewable Energy order in Thailand

  • Agreements to build three 90 MW clusters for the Theparak Wind farm in Central Thailand
  • 270 MW of total capacity to provide enough electricity to power the equivalent of 120,000+ local homes
  • Win supported by the GE Store; strong collaboration between GE Renewable Energy and GE Power.

Bangkok, 13 December 2017 – GE Renewable Energy and GE Power recently announced agreements to provide 270 MW of wind energy capacity to Wind Energy Holding (a member of Thailand’s KPN Group) for the Theparak Wind Farm in Central Thailand.

GE Renewable Energy is set to provide a total of ninety 3.0-137 wind turbines with 156.5m hybrid towers, making those the tallest turbines it has ever installed outside of Europe. Read full details by clicking here.

One third of 66 GE Haliade 150-6MW nacelles depart for Merkur Offshore windfarm

  • Complex logistical dance needed to complete project by 2018 remains on-track
  • When completed Merkur will be one of Germany’s largest offshore wind farms
  • Project will power around 500,000 homes and cut CO2 emissions significantly.

Paris, December 12th 2017 – GE Renewable Energy announces the depart of the last set of nacelles to be shipped this year to Merkur’s Offshore Windfarm logistical hub in Eemshaven Netherlands. By the end of the month this hub will have received 24 nacelles, 24 blades, and several other tower fragments and transition pieces. With all these component in-place, local teams will perform some pre-assembly works while getting prepared for the installation phase that is set to begin mid-February 2018. Click here for more for more details.

GE Power, Egypt’s EETC to connect 120 MW of wind power to national grid through extension of the Gabal El Zayt substation

  • Extension of the Gabal El Zayt substation will help connect up to 120 MW of wind power to the national grid from one of the region’s largest wind farms
  • GE will also provide local project management, engineering, design, fabrication, the erection of power transformers, site management, testing and commissioning services on a turnkey basis as part of the agreement

Cairo, Egypt; December 11, 2017: GE Power (NYSE: GE) today announced that it has signed an agreement with the Egyptian Electricity Transmission Company (EETC) for the extension of the Gabal El Zayt 22/220 kilovolt (kV) Gas Insulated Substation, connecting an additional 120 megawatts (MW) of power to the national grid by the end of 2018.

The extension will leverage GE Power’s Grid Solutions portfolio, which includes GE’s B105 220 kV gas-insulated switchgear (GIS), in addition to medium and low voltage systems, control and protection systems and auxiliary services. GE will also provide local project management, engineering, design, fabrication, the erection of power transformers, site management, testing and commissioning services on a turnkey basis. You can get more details from the company website at ge.com.

GE Renewable Energy Receives Full Maintenance contract for Alsleben Wind Farm in Germany

November 30, 2017

  • 9-year agreement to oversee full maintenance needs for the 54MW Alsleben wind farm
  • More than 20 years of services experience in Europe

Salzbergen, 30 November 2017 – GE Renewable Energy today announced it was awarded a Full Maintenance contract for the Alsleben wind farm in Germany by Dortmunder Energie- und Wasserversorgung (DEW21), a subsidiary of the municipal utility of the city of Dortmund in North Rhine-Westphalia, who currently operates the site and its 36 turbines.

The agreement includes the implementation of remote monitoring and regular maintenance intervals as well as the preventive maintenance and replacement of large components when needed. GE Renewable Energy will be responsible for the full maintenance of the facilities over a period of nine years. The agreement was tendered by DEW21 in the framework of a European procurement procedure. More details available at ge.com

A list of large companies to benefit from tax repatriation

source: Bloomberg

GE has 41.9% of their cash overseas, how much they will bring back is unknown but I believe it will be substantial.

Tax Reform Passes!

In a month where stocks rallied on tax reform, GE has GONE NOWHERE.

Today it is testing a yearly low that equals the low in Dec. 2011. Where does it end? Not sure, maybe here. The tax selling is coming to an end and some deep pockets may be stepping in to buy these levels the last several days. I have been buying while knowing it may get a little cheaper.

Tax reform will benefit GE although their tax bill is minimal, repatriation and corporate structure going forward stand to give great benefit to the company. I estimate a minimum of $ 2 to $ 3 a share in value from the new tax structure, we will have to wait until experts confirm my thesis.

To be clear, in my opinion GE should have rallied on the announcement of 12K job cuts or the largest renewable energy deal in Thailand. The stock should have rallied on the 200 locomotive deal with Canadian National railway but it didn’t. It barely showed up in the news.

The art of the shakeout

This is a real phenomenon that is going on as we speak, One negative article after another calling for a frightening drop from the current level of down 45% on the year and years of turnaround.

Yesterday’s headline

Deutsche Bank analyst John Inch, who rates GE a Sell with a $ 15 price target. Says they could exit Baker Hughes.

Great, just great, John Inch of Deutsche Bank(NYSE:DB) puts a sell with a target of $ 15? Of course the stock can go to $ 15, any human with a stock chart could see that as a possibility. These type of comments are made all the time at multiyear lows, it does not mean it is going to happen.

Deutsche bank wants to buy GE on the cheap along with everyone else. So here is my take: They could sell Baker Hughes, or keep Baker Hughes and ride the rebound in oil that is coming this spring. I think they should keep it and make it work.

John Inch is a person working for Deutsche Bank, speculating to the downside with his own agenda. GE could trade to $ 15 or also trade to $ 20 next month, place your bets accordingly. Investors should consider using options to hedge the downside if needed.

Perspective from experts

One need look no further then one of my favorite calls by Goldman Sachs (NYSE:GS) a couple years ago calling on iron ore to stay at $ 35 to $ 40 for the next 5 years. Vale (NYSE:VALE) was trading at a multi year low around $ 2.30 a share then. It now trades around $ 12. Maybe Goldman will make the next downside call that marks the bottom for GE.

I was pounding the table when Bank of America, (one of my favorite stocks) (NYSE:BAC) was $ 12.50 in June of last year 2016, it now trades near $ 30. GE will be fine and those buying this level will likely see a 50% upside or more in the next 12 to 18 months. IT pays to ignore the doom and gloom and backward looking forecasting as we move into a new age of corporate and global growth.

In a world where Riot Block chain (RIOT) can rally from $ 6 in November to $ 45 in a month on a name (like dotcom) and no earnings gives me serious pause. RIOT down 50% in a few days by the way should tell you something. Stay away for now from bitcoin unless you are prepared to lose 50% to 98% or more of your money.

A look at the charts.

Here is a 10 year weekly to show the path of GE. Believe it or not I owned GE at $ 8.60 on the day the market bottomed in March of 2009. I bought the bankruptcy rumor that plunged the stock to $ 5.72 in a 30 minute period of time on fake news. It should have been investigated by the SEC, in my view it was straight up mayhem in action. That whole drop from $ 11 to $ 5.72 should have been eliminated from the stock chart and never happened, but it did.

The lesson: keep enough reserve to stay liquid in the event of a catastrophe. At a multi year bottom anything can happen.

One more intraday 60 minute chart showing a solid entry point if you believe in buying low and selling high.

Interested investors can see this intraday 60 minute snapshot of GE from early October which covered the earnings call miss and the November 13th conference call.

Important note: there was capitulation; the stock was bought by insiders, it then sold off on great economic news and tax reform that was not totally expected. The stock made a new low by $ .10 cents on the day tax reform passed, testing the will of those long the stock.

Look for more Insider purchases in the next 30 days.

I will be watching closely and keeping readers apprised of any new insider purchases in the coming weeks as more insiders step up to purchase shares. My last report on insider buying of GE showed the CEO of LOEWS buying 3 million shares on behalf of the company. Interested investors can read the full article by clicking here.


GE is in the dog house, down 45% on the year. The market has so far been ignoring many recent positive developments that would other wise cause a nice relief rally. Year end tax selling is pressuring the stock but I believe many are buying GE right now and not publicly talking about it.

In a world of news dominated by bitcoin and block chain, one could do a lot worse than putting some money to work in GE with a 12 to 24 month time horizon.

The 200 locomotive deal is a great win For GE, the Largest renewable energy order in Thailand is a positive and signal of more to come in SE Asia. All of these events are going unnoticed at the moment which is a good way to get a stock on sale.

At some point in the the near future the narrative will change and it will be all about global growth, and tax reform benefits to corporations. Until then buckle up and buy any weakness from here. The bottom may be in right now or there may be a little more pain but GE has some really exciting things going on including 3D printing that could be amazing for future growth.

I am a buyer of GE at this level and am excited about the digital revolution within the company. Flannery is making the right moves at the right time and it is my belief GE will turn the corner much quicker than the market is forecasting at year end.

As always, do your own research and always have an exit strategy in place before putting your hard earned dollars to work.

If you found this article interesting, please follow me and consider joining my site Bargain Hunter for my timely trade ideas in real time.

Disclosure: I am/we are long GE,CHK,LYG, BP,NBR.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


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General Electric: Numbers Game
September 27, 2017 10:30 am|Comments (0)

Investment Thesis

General Electric (GE) is selling its industrial solutions business to Swiss rival ABB for $ 2.6 billion. The company is clearly targeting underperforming plants and putting them up for sale. This is one way to improve its free cash flow problems, and we can expect more of this in the near future. The stock has bounced from its key support level, and bulls are in full control. The new CEO is expected to give an update on the 2018 outlook in November. I expect the stock will continue to recover from its previous losses.

Free Cash Flow

It’s all about free cash flow. As we can see from the below chart, GE’s free cash flow has been sliding. Wall Street analysts estimate the company’s free cash flow for fiscal 2017 at $ 7.5 billion.

Once the company improves its free cash flow, the market will react positively. From a shareholder point of view, free cash flow is very important because it sustains confidence that the company will continue to pay dividends. From the company’s point of view, it has enough free cash flow to service its debt and further expand its business; the company is trying to improve its free cash flow through various measures, such as getting rid of underperforming assets and reducing corporate overhead.

Source: Tradingview

As we can see from the above chart, regardless of declining free cash flow, the stock has still been on the uptrend. In terms of technicals, the stock didn’t break the key support level, but bounced back instead, suggesting that the bulls are in control. With more positive news to be anticipated from the new CEO, I expect the stock will continue to recover from its previous losses.

Source: Tradingview

Oil prices are gradually recovering, so the newly merged Baker Hughes, a GE company (BHGE), should post better earnings. With the help of BHGE and other segments, GE’s free cash flow should improve substantially.


Since the company is working to address its free cash flow problem, it is safe to conclude that there is no serious danger of a dividend payment cut. In 2016, GE’s industrial solutions business generated $ 2.7 billion in total revenue and posted a profit margin of 2.1% (making it one of the least profitable business units). To me, any profit is good–but underperforming business units would be pulling the company’s overall performance down. By getting rid of underperforming plants, amongst other measures, the company should be able to generate higher free cash flow. It’s all about numbers in the end, and based on those numbers, I still recommend GE as a buy.

Author’s note: Get my articles as soon as they are published by clicking the big orange “Follow” button at the top of this page. To read my previous articles, please click here.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


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AirPods or electric toothbrushes? The internet is very confused.
September 9, 2016 2:25 am|Comments (0)



Upon Apple’s announcement of the iPhone 7 and its wireless AirPods, consumers took to social media to express their confusion about the wireless headphones. Read more…

More about Mashable Video, Iphone, Iphone 7, Airpods, and Apple


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Too Bad You’ll Never Drive Nissan’s Razor-Like Electric Concept
August 5, 2016 9:45 pm|Comments (0)

Too Bad You’ll Never Drive Nissan’s Razor-Like Electric Concept

Nissan’s BladeGlider concept is for those who like their cars lean, green, and byzantine. The post Too Bad You’ll Never Drive Nissan’s Razor-Like Electric Concept appeared first on WIRED.

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