Jim Cramer’s Game Plan: 23 Stocks to Watch

2. GE Aerospace (NYSE:GE)

Number of Hedge Fund Holders: 86

Cramer previously talked about GE Aerospace (NYSE:GE) and commented that due to significant production challenges faced by Boeing and Airbus, there is a growing need for airplanes to have a longer lifespan. He added that consequently, the company’s engine service division is “on fire”.

“Tuesday’s also a real big aerospace morning with numbers from RTX and GE Aerospace. Now, both stocks have been flying high. I bet that continues after the report, and most likely, they will raise estimates. These are two fantastic, well-run companies.”

GE Aerospace (NYSE:GE) is involved in designing and manufacturing engines for both commercial and military aircraft, as well as providing integrated engine components, electric power systems, and mechanical aircraft systems. According to management, as the year progressed, the company showed significant financial growth, with earnings and free cash flow both increasing by over 50%. The company achieved a remarkable free cash flow conversion rate of nearly 120%, highlighting its operational efficiency.

Building on these strong results and positive momentum, the company raised its profit and cash flow guidance. Revenue growth is now expected to rise in the high-single digits because of a decrease in equipment revenue within the Commercial Engines & Services (CES) segment. The revised expectations show that CES equipment revenue will increase in the high single to low double digits, a shift from previous forecasts of high-teens growth.

In terms of services, CES is forecasted to see growth in the mid-teens, leading to overall CES growth projected at low-double digits to mid-teens. Regarding operating profit, GE Aerospace (NYSE:GE) now expects a range between $6.5 billion and $6.8 billion, marking an increase of $250 million at the midpoint from earlier forecasts, accompanied by margin expansion.

The improvement is primarily driven by CES, with its operating profit now expected to fall between $6.3 billion and $6.5 billion, up from the previous estimate of $6.1 billion to $6.4 billion. Additionally, the company has raised its free cash flow guidance to a range of $5.3 billion to $5.6 billion.