This Year's Biggest Surprise Stock Mover May Be General Electric

Nardelli Says GE Turnaround Is a 'Herculean Task'

General Electric has kicked off the new year on a strong note, with its shares up around 10% in the first week and a half of trading. But why is it rallying?

The industrial behemoth is coming out of an especially turbulent year that sent its stock price down a staggering 45 percent, even as the broader market smashed records. Several analysts said the shares are benefiting from oil’s rally to a three-year high. GE is among the top performers on the Dow Jones Industrial Average this year, after finishing 2017 at the bottom of index.

“Oil and gas has become a more significant business for them with the Baker Hughes deal,” Edward Jones analyst Jeff Windau said. “We believe some value investors have taken positions in GE given the beaten down stock price. In addition, the industrials sector has started the year off strong and is up about 4 percent.”

The cheaper valuation is definitely getting noticed. Yesterday, Warren Buffett said during a CNBC interview that he would buy GE shares at the “right number.” That triggered a mini rally, according to multiple traders, sending the shares up 2 percent on Wednesday.

However, not everyone is willing to be converted so soon. In a note to clients today, Oppenheimer analyst Christopher Glynn said he was trimming his 2019 earnings estimate for the company, citing slower contract asset growth and excluding contributions from GE’s transportation and lighting segments, which are expected to be divested.

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