UBS named General Electric one of "Our Highest Conviction Calls" for 2020, and an underappreciated buy. We're covering all of the UBS picks in a sort of impromptu series, about the companies who seem like the best bets for stock bouncebacks or continued domination.
GE is one of the biggest companies in the world, so while it might be obvious to choose them to gamble on, upon further inspection into the data, we can find some very intriguing trends and storylines that could emerge. One that caught our eye was this report about the Boston Celtics dropping GE as a jersey sponsor, but honestly, that would be a drop in the bucket for them.
UBS analysts said they think GE remains a growth story and that investors are still sitting on the sidelines waiting for further evidence of operational improvement. The analysts said three key factors will support GE’s positive inflection going ahead: that it has successfully de-levered; that it has grown EPS; and that it is growing industrial free cash flow. They stuck a $14 price target on the stock, putting it on pace for gains of more than 25% if they’re right.
You can see how the last two years the stock dropped five bucks, but that hasn't really stopped GE from hiring more and more people. Since 2017, the staff count has gone up 9%, and a few weeks ago cracked a quarter of a million employees total.
It's contradictory then, to see the job openings go way down. At the start of 2019, there were around 5K listings, and by the end of the year, that number was cut in half. Most of that employee growth came from 2018, but it's good to see that there haven't been any mass layoffs or inklings of downsizing/restructuring.
Not that social media is the end-all-be-all for GE, but a reason the Celtics might be looking for other sponsorship opportunities is that GE has totally hit a plateau on Facebook and Twitter. 2019 saw zero growth on both platforms, and since it's easy to look and see the numbers not move up on followers, I'm sure somebody in Boston noticed and thought about a change. We can't blame them either.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales and app ratings - and creates data sets that measure factors like hiring, revenue and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.
Further Reading:
- The market is more psyched for a more efficient Norfolk Southern
- Our biggest predictions of 2019 - and how the data told the story
- The data behind 2019's biggest CEO resignations