I think 2021 will be much more challenging for investors than 2020. Not only do we have the aftermath of the Covid-19 epidemic and its costly lockdowns to deal with, our deeply divided society and gridlocked government are likely to continue, cautions Jim Powell, editor of Global Changes & Opportunities Report.
One blue chip fallen angel that I believe will perform very well in 2021 is General Electric (GE) — which also was my top choice last year. The stock is up 48.5% since my recommendation in 2019 and I think GE will continue to do well in 2021.
GE’s CEO, Larry Culp, continues to eliminate underperforming operations and redirect the company’s resources towards those that are working. All four of GE’s industrial businesses are doing well and should continue to do so in 2021.
Aviation (primarily GE’s powerful and efficient jet engines) should do especially well as people throughout the developed world start to travel again. GE Power should also have a good year as the global economy begins to recover from the Covid-19 recession — and so does the demand for electricity.
GE Renewable Energy should do even better as solar and wind power make significant advances this year. GE Health Care is unlikely to see the strong bounce that I expect for the company’s other operations – but another year of steady growth will generate more cash and profits.
On October 28, 2020 GE surprised investors with a rebound in profits and cash flow. The company’s turnaround plan is clearly working. GE’s recovery will not happen quickly and probably not smoothly.
However, I feel strongly that long-term investors who take positions in GE at today’s price will be very happy they did. It won’t be the first time that this 126 year old company stumbled badly and then worked its way back up.
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