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Should You Dig Into Value With GE ETFs?

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By now, General Electric Company’s (GE - Free Report) pain is known to all.The stock is down more than 25% this year and has lost about 54.6% in the last one year (as of Mar 27, 2018). And why not? Piling debt, web of legal issues, the biggest pension shortfall in the S&P 500 and liquidity crunch have thrashed the stock, per CNN.

The stock witnessed negative earnings surprises in the last two quarters, which translated into an average negative surprise of 2.22% for the trailing four quarters. No wonder, the stock is badly beaten down and now has a Value Score of B.

Warren Buffett Said to Be Interested in GE

Talks of Warren Buffett targeting GE for an investment are underway. Back in 2008, he helped bring stability to GE but sold off all his shares in the company last year. Now, the talks of buying GE shares again helped the stock to add about 4.3% on Mar 27, its best day in three years. However, neither GE nor Berkshire Hathaway BRK-A commented on this. Previously, Warren Buffett indicated that Berkshire may buy GE at the “right number.”

Buffett is known for taking interest in value stocks. He believes that investing in stable companies whose products are strong sales-generating are better long-term bets than a “get-rich-quick approach.” Buffett is known to follow the Benjamin Graham school of value investing. Buffett doesn’t seek capital gains but ownership in quality companies that are capable of generating earnings (read: Buffett Backs Great Rotation: 4 Value Stocks & ETFs to Buy).

Inside the Value Quotient of GE Stock

Stressful trading over a long period of time has made the GE stock more value oriented than its related diversified industrial operations industry (read: Industrials ETFs in Focus on Q4 Earnings).

From the above-mentioned table, we can see how undervalued the GE stock is against the industry.

Same Business Interest

According to an article published on CNN, Berkshire and GE have some businesses that have common interests. For example, “Berkshire owns Burlington Northern Santa Fe, which operates one of the largest freight railroads in North America. GE is among the largest producer of freight locomotives in the world, although it's looking to sell this century-old business to raise cash.”

Why to Pick GE ETFs Instead of Stock?

The stock has a Zacks Rank #4 (Sell) at the time of writing, but belongs to a top-ranked Zacks industry (top 20%). So, it is better to pick funds having considerable weight in GE. The company gives exposure to some big industrial ETFs. With U.S.-China trade tensions stepping back, industrial ETFs should regain its luster in the coming days (read: Will Trade War & Inflation Worries Spoil Dow ETF Party?).

Industrial Select Sector SPDR Fund (XLI - Free Report)

GE takes the third spot in the fund with about 4.89% focus (read: Industrial ETFs at All-Time Highs: Any Value Left for 2018?).

Guggenheim Dow Jones Industrial Average Dividend ETF (DJD - Free Report)

The fund puts 4.3% of its weight in GE.

Fidelity MSCI Industrials Index ETF (FIDU - Free Report)

The stock occupies the third position with about 3.88% exposure.

Vanguard Industrial ETF (VIS - Free Report)

The fund puts about 4% weight in GE.

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