How to Buy General Electric (GE) Stock

Jump straight to it: Invest in GE stock today with Interactive Brokers as your trusted online brokerage.

With a history that spans over a century, GE has transformed from a humble electrical company to a diversified global powerhouse. The allure of investing in a company that has weathered economic storms and adapted to the ever-changing technological landscape is strong. However, with the complexities of the stock market and the unique challenges that come with investing in such a storied corporation, it’s vital to approach this decision with knowledge and confidence.

If you're eager to make a smart investment but aren't sure how to navigate the process, this guide will equip you with the foundational insights and strategies you need to confidently buy GE stock and maximize your investment.

Steps to Buy General Electric Stock

If you’ve weighed the pros and cons of buying shares in General Electric and still want to take the plunge, here are the steps to take. When a stock has been punished the way GE has, it’s important to take each step slowly and confirm your plan. A lot of smart investors have lost money trying to call a bottom on GE’s stock.

Step 1: Plan Your Investment Goals

Every investment needs a goal. Once you narrow your focus and set goals, you’ll be able to take some of the emotion out of investing. When buying a stock like GE, define your goals before you even think about putting capital to work. How long do you want to hold the stock? How much pain can you endure if it turns down again? How much upside are you trying to capture? An investment goal should involve an exit strategy for both the downside and upside and a timeframe for long you can hold the stock if it moves sideways.

Step 2: Determine How Much Capital to Risk

After formulating some investment goals, figure out how much capital you’re willing to tie up in a GE investment. Think about the opportunity costs of using that capital on GE — that’s less money you’ll have for investment in say, Amazon stock, or Tesla puts. You should never put too much money into a single stock and that’s infinitely truer with a potential wealth-buster like GE.

Step 3: Pick a Discount Brokerage for Your Trade

Okay, now we have a plan and our capital allocated. But where to buy shares? Online brokerages are your best bet for popular stocks like GE. Charles Schwab, Ally Invest, Fidelity and E*TRADE have all reduced sales commissions to $4.95 per trade.

Interactive Brokers charges a fraction of a penny per share, and then there’s the completely commission-free Webull. Volatile stocks like GE can change investors’ minds in a hurry, so we don’t want to pay through the nose to get out of the trade.

Step 4: Find an Entry Point

Once you’ve chosen a broker and funded your account, it’s time to plan your trade. But don’t just rush in and buy shares. Wait for a proper entry point to maximize profits. Technical traders often look for support levels to make buys and price points where the stock seems to always find buyers. Using support levels, try to find a good entry point for your trade. You don’t want to enter a trade at a resistance level and be underwater immediately.

Step 5: Execute Your Trade

Once you identify an entry point, it’s time to execute the trade. Enter the number of shares you want to purchase and confirm your order. Use a limit order if you want to enter the stock at a specific price only or a market order if you want to immediately buy shares at the best available price. After executing your trade, keep an eye on it with your broker’s watchlist and charting system.

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History of GE Stock

Few companies in the public markets have been around longer than General Electric, which formed shortly after J.P. Morgan and Anthony Drexel convinced famous inventor Thomas Edison to combine his numerous business interests under one umbrella. At the time, Edison had a hand in running 4 different electricity companies: Edison Lamp Company, Edison Machine Works, Bergmann & Company and the holding firm Edison Electric Light Company.
GE’s original iteration was born in 1890 when Edison merged these 4 businesses into the Edison General Electric Company. Two years later, Edison’s new company merged with rival Thomson-Houston and became officially known as the General Electric Company.

Brief Company History

In 1896, General Electric was asked to join 12 other companies in forming a brand new type of stock market tracking system known as an index. This index would be known as the Dow Jones Industrial Average. GE joined other American industrials like American Sugar Company, American Tobacco Company, Chicago Gas Company and United States Rubber Company. Today, General Electric is the only company from the original Dow 12 to remain in business.

The first half of the 1900s was a period of innovation and expansion for General Electric. A number of breakthroughs occurred in GE labs, such as finding phenolic resins to mold plastic (1912), building the first electric dishwasher (1935), building the first jet engine (1942), developing Lexan plastic (by accident in 1953), and creating the first solid-state laser (1962). GE also expanded vastly over this time period, building divisions in finance, aviation, healthcare, energy and entertainment.

In 1981, Jack Welch took over as CEO and began molding the firm to his vision. Welch became one of the most famous CEOs in history, synonymous with American business success following his run at GE. During the 1980s, Welch worked diligently (and to his critics, cruelly) to reduce overhead and cut unprofitable divisions. Welch ran a “rank and yank” system, where he grouped his managers and fired the group in the bottom 10% every year. General Electric’s market cap increased from $12 billion to over $400 billion by the time Welch’s tenure ended in 2001.

Jeff Immelt took over after Welch and his run was anything but smooth. GE has been losing market share and revenue since the Recession. While most large-cap American companies are enjoying the longest bull run in stock market history, GE has been sinking. Its current market cap is just over $87 billion, the stock price is only $10 and the dividend yields a measly nickel. Plus, the company was removed from the Dow Jones Industrial Average after more than a century in 2018.

The stock spent all of 2017 and 2018 in a freefall, bottoming out at an all-time split-adjusted low of $6.45 on December 12, 2018. Since that all-time low, GE has rebounded a bit. Since the calendar flipped to 2019, GE is up 38% and has renewed interest from investors.

Source: Google

At the onset of the COVID-19 pandemic, the stock plummeted alongside many others, primarily due to the uncertainties surrounding global supply chains and industrial production. In the latter part of 2020 and into 2021, GE exhibited a recovery trend as the company began to stabilize its operations and refocus its strategic initiatives. By 2022, the stock price had shown significant improvement, reflecting investor confidence in the management's restructuring efforts and the broader recovery of the industrial sector.

As of 2023, the price chart of General Electric indicates a period of consolidation with fluctuating prices. The stock reached new highs since 2016 as the company announced advancements in its aviation and renewable energy sectors, positioning itself as a leader in clean technology. Through early 2024, the stock is expected to stabilize further as the company solidifies its recovery and capitalizes on emerging market opportunities.

Should You Buy GE Stock?

Given the current market conditions and the company's strong performance, the question arises: should you buy GE stock?

Pros of Buying GE

• Strong brand recognition: GE has a long history and is recognized globally, which provides a level of trust and reliability in its products and services. This brand loyalty can translate into a stable customer base and sustained revenue.
• Diversified business portfolio: GE operates in multiple sectors, including aviation, healthcare and renewable energy, which allows it to spread risks and capitalize on various growth opportunities. This diversification can be advantageous during economic fluctuations as different sectors may perform differently.
• Focus on innovation: GE has consistently invested in research and development, positioning itself at the forefront of technological advancements and innovation in multiple industries. This commitment can lead to higher profitability and market share in emerging sectors, such as green technology.

Cons of Buying GE Stock

• Marred by controversy: From the failure of former CEO Jeff Immelt to numerous pollution scandals, GE’s public image has taken a hit. Repairing an image takes time and unless the price goes parabolic, investors will stay away from stocks with bad reputations.
• Overwhelming debt: Selling off non-profitable divisions can be a fine business decision, but employees who found themselves fired had to wonder about GE’s constant presence on the merger and acquisition market. GE’s debt load is tremendous; some analysts estimate the company is sitting on $19.7 billion in debt and liabilities.
• Regulatory challenges: Operating in industries like healthcare and energy, GE is subject to strict regulations and compliance requirements. Any changes in government policy or increased regulatory scrutiny can impact the company’s operations and profitability.

Is GE Stock the Right Choice for You?

Investing in GE stock presents a compelling opportunity if you're seeking exposure to a diversified industrial giant with a strong focus on innovation and sustainability. With its ongoing transformation and strategic initiatives aimed at streamlining operations and enhancing shareholder value, GE is positioning itself for long-term growth. However, as with any investment, it’s essential to conduct thorough research and consider both the risks and rewards.

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