General Electric Is A 'Screaming Buy' And 'Spectacular Opportunity,' Analyst Says

General Electric Company GE's valuation took a hit last week when the company announced a dividend cut and an update on its business that disappointed many investors.

The Expert

Larry McDonald, founder of the Bear Traps Report.

The Strategy

At a time when many investors are pulling the plug on GE's stock, McDonald said it gives investors a "spectacular opportunity." 

The Thesis

GE shares are set up for a "very unusual opportunity" for two key reasons, McDonald said during a recent CNBC "Trading Nation" segment.

First, despite Moody's Investors Service downgrading the company, the credit markets aren't showing signs of worry, he said. Second, GE's story is likely to improve over the next six months, which implies the stock is a "screaming buy" at current levels.

Also, a new management team running GE, led byrecently appointed CEO John Flannery, is a positive catalyst for the stock, McDonald said. As is typically the case with any new CEO, they "come out with a lot of truths that the previous management wouldn't unearth."

Price Action

Shares of GE were trading lower by more than 1.5 percent Monday afternoon at $17.91, within striking distance of the stock's 52-week low of $17.46.

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