I believe in “Everyday Investing,” a concept I developed several years ago that’s modeled after Peter Lynch’s theory that you should invest in what you know.
All around us are products and services we use that are made or provided by publicly traded companies. Lynch believed consumers held an advantage over the professional investor because they spend so much time in the real world observing these companies.
Take General Electric (NYSE:GE). Who doesn’t own one of their light bulbs? But I’m going to dig a little deeper to find five examples of GE’s hidden impact in your life. They might not get you to invest, but they will remind you that one of America’s oldest companies affects you in ways you didn’t even realize.
The other day I was pumping gas into my car at my local gas station. I looked about halfway down the pump and saw the name Wayne imprinted on it. Being a curious person, I immediately went to Google to find out who this Wayne was. It turns out the Wayne Oil Tank Company dates back to 1891, several years before the Duryea brothers introduced the first gas-powered automobile. In 1968, Wayne was acquired by Dresser Industries, which was subsequently acquired by GE Energy in February 2011 for $3 billion. So the next time you fill your tank, have a look at the name on the pump. You just might be adding to GE’s prosperity.
Lately it seems JetBlue (NASDAQ:JBLU) can do nothing right when it comes to public relations. Its pilots and flight attendants are getting into brushes with the law at an alarming rate, and ts shareholders are probably a little concerned.
How does this relate to GE? GE Capital Aviation Services has been providing aircraft financing to the company since 2003. Today, it’s JetBlue’s largest source of funding, with more than $1 billion invested in 42 of its planes. On your next flight from New York to Las Vegas, just remember who made it possible.
About an hour’s drive northwest of Toronto, where I live, there’s a huge wind farm operated by TransAlta Corporation (NYSE:TAC), a Canadian electricity generator. The two farms generate 200,000 megawatt-hours per year of renewable energy, with 545,000 megawatt-hours the ultimate goal.
Well, you can’t have a wind farm without wind turbines. TransAlta uses 133 GE 1.5-megawatt, 80-meter wind turbines to generate power. According to GE’s website, it has more than 16,500 1.5-megawatt turbines installed globally.
While the wind farms might seem like a nuisance, their presence helps keep a lid on electricity costs in Ontario. So the next time you see one of those enormous turbines with its blades spinning around, just remember it’s helping with your state’s electricity needs.
Remember the BP (NYSE:BP) oil spill in the Gulf of Mexico in 2010? If you recall, the news media spent a great deal of time informing viewers about the various intricacies of offshore drilling. One of the topics was the malfunctioning of the blowout protector (BOP), which is used to regulate the flow of oil from the well to the rig.
The blowout protector on the Deepwater Horizon rig was manufactured by Cameron International (NYSE:CAM), which settled with BP for $250 million this past December. The settlement demonstrates just how important BOPs are to the safety of an oil rig.
In 2008, GE bought Hydril Pressure Control, a leader in the field of blowout protectors, for $1.1 billion from Tenaris S.A. (NYSE:TS). The acquisition added to the importance of GE’s energy-infrastructure segment, which represents 30% of its overall revenues and segment profits.
For our final under-the-radar product, let’s look to the surgical suite, where GE’s Vital Signs unit provides single-use anesthesia circuits — the tubes and other consumables that help keep you unconscious while in surgery. GE has a long history in high-tech medical equipment, including the anesthesia machines themselves, but the $860 million acquisition of Vital Signs in 2008 gives it good recurring revenue. The next time you or a loved one goes under the knife, there’s a good chance GE’s got a hand in your well-being.
While this might sound like an advertisement for GE, it’s really an example of what Peter Lynch was talking about when discussing the advantages amateur investors have over professionals. Open your eyes, and you’ll be amazed how you can benefit.
As of this writing, Will Ashworth did not own a position in any of the stocks named here.