General Electric (NYSE:GE) fell in late July after the industrial giant reported second quarter numbers which were, quite frankly, pretty ugly and GE stock paid the price.

Revenues fell 20%. Industrial profit margins fell more than 10 points. Free cash flow came in at negative $2.1 billion.

It was an ugly print.

And Wall Street reacted appropriately, selling GE stock back to essentially its lowest levels since the 1990s.

I think it’s time to buy the dip. Mostly because I believe a Covid-19 vaccine is just around the corner, and that widespread distribution of that vaccine among the general populous will spark a broad rebound in most of GE’s industrial end-markets in 2021.

This rebound will converge on what is a deeply discounted valuation on GE stock, and ultimately cause shares to nearly double from here.

Here’s a deeper look.

A Covid-19 Vaccine and GE Stock

With respect to Covid-19, I believe the base case scenario is that we get at least one vaccine (and maybe multiple) approved by October or November, and broad population distribution of those vaccines by early 2021.

My bullishness here comes to down a few things.

One, the world has put all of its resources into finding a vaccine. The result is that we now have over 140 pre-clinical Covid-19 vaccines out there, 19 Covid-19 vaccines in Phase I trials, 12 vaccines in Phase II trials and 5 vaccines in Phase III trials.

The notable vaccines in the later stages of development – such as those from Moderna (NASDAQ:MRNA) and AstraZeneca (NYSE:AZN) – have passed their trials with flying colors.

In other words, the world put all of its resources into finding a Covid-19 vaccine. We now have several which look like they are on the cusp of being approved. That’s the power of human innovation. And human innovation has a long, several-thousand-year track record of trumping crisis after crisis.

Two, health experts are now starting to say that October/November vaccine approval is both plausible and even likely. Most notably, Dr. Anthony Fauci, who is widely perceived as the world’s foremost authority on Covid-19, recently said that a Covid-19 vaccine is possible in October, and likely in November.

Three, mass production of a vaccine has already started. Pretty much everyone, ranging from the companies making the vaccines to the U.S. government, believes that we will have, at least, several hundred million vaccine doses ready to go by early 2021.

All in all, I think it’s quite likely that we get a Covid-19 vaccine by October or November, and that such a vaccine is easily and broadly accessible to the U.S. public by early 2021.

Big Rebound Potential in the Industrial Economy

Easy and broad access to a Covid-19 vaccine will greatly diminish the public threat of coronavirus and spark rapid economic activity normalization.

This is especially true in many of General Electric’s industrial end-markets.

Consumers will start flying again. Airlines will start ordering planes again. And GE’s Aviation unit will rebound meaningfully.

The healthcare industry will normalize. Covid-19 hyper-focus will give way to a return to normal procedures and surgeries. This return to normal will create elevated demand for many of the services and products which GE Healthcare sells to hospitals across the world.

The Power business will rebound, too, as broader industrial economic activity recovers.

All in all, GE’s 2021 will be a lot different than its 2020. Revenues will rebound sharply. Margins will recover to and above 2019 levels (thanks, in part, to management’s commitment to slimming operations and gutting the expense model).

Ultimately, profits will rebound in a big way.

So will GE stock.

General Electric Stock Is Too Cheap

GE stock is dirt cheap today.

The stock trades at 0.6-times trailing sales. That’s low. The stock’s five-year-average trailing sales multiple is closer to 1.5.

Given this depressed valuation base, it’s not hard to see GE stock doubling from here over the next 18 months.

Here’s the math.

GE’s revenues were $95 billion in 2019. They’ll collapse this year. Rebound in 2021. And then likely recover to 95% of 2019 levels by 2022 as GE’s industrial end-markets get “back to normal”. Assuming so, that puts GE’s 2022 revenues at $90 billion.

Profit margins were around 10% in 2019. Again, they’ll collapse this year. Rebound in 2021. And almost fully recover to 2019 levels by 2022.

On those assumptions, I think GE can do about about 80 cents in earnings per share by 2022. Throw a typical industrials sector 15-times forward earnings multiple on that. You get a 2021 price target for GE stock of $12.

That’s nearly 100% above where shares trade today.

Bottom Line on GE Stock

GE stock is depressed today because the global industrial economy is depressed.

But, if a Covid-19 vaccine is broadly distributed to the general public in 2021, then global industrial economic activity will rebound sharply over the next 18 months. As it does, GE’s core Aviation, Healthcare and Power businesses will post huge growth over the next two years.

Alongside that huge growth, GE stock could fly higher. By as much as 100% given today’s depressed valuation.