This Stock Is Still A STEAL — And Nobody Sees It

About this video

• Video Title: This Stock Is Still A STEAL — And Nobody Sees It
• Channel: Jerry Romine Stocks
• Speakers: Jerry Romine
• Duration: 10:26

Overview

This video argues that General Electric's (GE) aerospace division, GE Aerospace, is significantly undervalued and overlooked by the market. The speaker explains that GE has been restructured, and the remaining GE Aerospace is a highly profitable business with a dominant position in the aviation industry, particularly in jet engines and their long-term servicing. The video highlights GE Aerospace's strong financial performance, recurring revenue model, and wide economic moat as reasons for its investment potential, contrasting it with the outdated perception of GE as a struggling conglomerate.

Key takeaways

• Misconception of GE: Many people still perceive GE as a struggling industrial company, unaware that it has been restructured and that GE Aerospace is now a highly profitable and dominant aviation business.
• GE Aerospace's Dominance: GE Aerospace is a leader in the aviation industry, powering a significant majority of commercial flights and holding a dominant position in jet engine manufacturing and lifecycle services.
• Recurring Revenue Model: The company's business model relies heavily on long-term service contracts for engine maintenance, which provide a stable and predictable stream of recurring, high-margin cash flow, similar to the "razor and blade" model.
• Strong Financial Performance: GE Aerospace recently reported a strong quarter with significant year-over-year increases in revenue, profit, earnings per share, and free cash flow, exceeding market expectations and leading to raised full-year guidance.
• Vast Economic Moat: The company possesses a massive economic moat due to high switching costs for airlines, technical advantages, a large installed base of engines, and recurring revenue, making it difficult for competitors to displace GE Aerospace.
• Long-Term Investment Opportunity: Despite recent stock gains, the speaker believes GE Aerospace is still a compelling long-term investment, offering consistent output and a durable business model, especially for investors who are patient and understand the underlying financial mechanics.