General Electric (NYSE:GE) stock has been killed in 2020, with shares dropping 45% year-to-date as the Covid-19 pandemic has killed economic activity in the company’s core manufacturing end-markets, including the airline, automotive, healthcare and power industries. But there’s reason to believe that this drubbing of GE stock is close to its final chapter, and that the stock is on the cusp of staging a huge turnaround over the next few quarters.

Specifically, there are three big reasons why General Electric’s stock could double in 2021.

Here’s a deeper look.

GE Stock Bull Case: The World Is Normalizing

Look around you. Doesn’t it feel like things are getting back to normal?

People are going out more. Traffic is coming back. Malls, shops and restaurants are busier. Movie theaters are open. So are theme parks. Sports are back. Students are going back to school. Employees are returning to the office.

These things are happening. Everywhere. According to smartphone tracking data from SafeGraph, consumer mobility across the U.S. — which plunged as much as 20% below normal in April — is now just 2-3% below normal levels.

I’m not sure exactly what happened. Maybe it’s virus fatigue. Maybe it’s stay-at-home boredom. Or maybe it’s the realization that we can sustain quasi-normal behaviors while keeping virus risks at bay.

Whatever it is, the world has increasingly decided over the past few months that — even though Covid-19 is still around — we are going to get back to as normal as we possibly can.

And we are doing just that.

For stocks to whom Covid-19 was a huge headwind — like GE stock — this rapid societal and consumer behavior normalization is a big positive.

Manufacturing Activity Is Rebounding

Over the past several months, manufacturing activity across the globe has sharply rebounded from its Covid-19 lows.

Yardeni’s composite global manufacturing Purchasing Managers Index (PMI) has rebounded from below 40 in April, to around 52 in August — matching its highest reading since early 2019. Importantly, this rebound is happening everywhere. In the U.S. Across the EU. In Asia and Oceania. In emerging markets. Everywhere.

And that was throughout the summer. According to SafeGraph’s data, the world’s normalization process has actually accelerated in August and September. This accelerated normalization lays the groundwork for the current rebound in global manufacturing activity to get even better over the next few months.

That’s all great news for GE’s stock holders.

Consumers will start traveling more, so airlines will start ordering more planes and plane parts (which GE makes).

Consumers will start shopping more, too, so automotive OEMs will start selling more cars (and GE makes a ton of parts of cars).

People will start going back into hospitals for elective surgeries, creating a surge in demand for the parts and equipment which help facilitate those surgeries (and, yes, GE makes that stuff, too).

All in all, then, GE’s presently depressed demand trends should rebound significantly over the next several years as activity in the company’s core end-markets picks up.

General Electric Stock Is Dirt Cheap

General Electric stock today is dirt cheap.

The stock currently trades at 60% of its trailing sales base. Normally, the stock trades at 140% its trailing sales base. The presently depressed valuation is a function of the company’s presently depressed demand trends. But as those demand trends recover to normal levels over the next few quarters, GE’s valuation should similarly recover to normal levels.

This multiple expansion — coupled with bigger sales and profits on the back of better end-market demand — will drive GE’s stock price far higher in 2021.

How much higher?

On the basic assumptions that — by 2022 — GE’s sales and profit margins will rebound to 2019 levels, I see the company doing about 80 cents in earnings per share. Throw a typical industrials sector 15-times forward earnings multiple on that and you get a 2021 price target for GE of $12 per stock.

That’s about double the stock price of GE today.

Bottom Line on GE

General Electric isn’t a long-term winner. But it’s a great buy on this dip as a play on rebounding manufacturing activity in 2021.

I see GE stock doubling from here over the next 12-plus months.