General Electric Company (NYSE:GE) — GE stock rebounded 2.1% on Tuesday following the two-day drubbing suffered by the broader market on the unexpected outcome of the Brexit vote.
This blue-chip stock has international exposure as a leading maker of a wide range of products from jet engines to consumer appliances to water treatment systems. Its GE Capital division also provides consumer and commercial financing, although the company is in the process of transitioning away from finance.
S&P Capital IQ Equity Research, which rates GE stock a “Buy” with a 12-month target of $38, believes lower revenues from GE Capital, as well as weakness in the oil and gas division, will be offset by strength in the power and water and aviation and transportation segments. Sales from ongoing operations are expected to increase 5% to 6% this year.
However, a continued rally in crude oil could cause analysts to up their revenue and earnings estimates.
Turning to the chart, we can see that since its low under $25 in late September, GE stock recovered to trade within a broad right triangle with support at its 200-day moving average at $29.53 and a trendline at $29.50, drawn from the bottom of the October gap up.
Last week, a downside gap opened at $30.97 to $30.55, which could act as a short-term target during an attempt to drive GE stock to a new high. So far, the stock’s resistance line is defined by a triple-top at $31.30.
Traders should buy GE stock at $30 with a target of $35 for a potential return of more than 16%. Investors should buy shares at the market price for the chance at even greater capital gains, plus income. General Electric currently pays an annual dividend of 92 cents per share for a forward yield of just over 3%.
