The Boeing Company (BA), General Electric Company (GE): Buy 787 Suppliers, Not the Maker

General Electric Company (NYSE:GE) shares trade with a PE of around 17 and yield about 3.2%. After taking a government handout and cutting its dividend during the 2007 to 2009 recession, General Electric Company (NYSE:GE) has been refocusing around its industrial core. That’s led to top-line declines, but bottom-line growth.

The finance arm, which brought the company low during the recession, is still disproportionately large at 31% of 2012 revenues. Management is working on that and has suggested that it may spin off finance businesses that don’t support its industrial focus. Although the Aviation group only made up 14% of the company’s top-line last year, that was second only to the Power and Water division on the industrial side.

General Electric Company (NYSE:GE)’s high-tech jet engines, recovering and diversified business, and relatively low price should interest growth and income investors looking for a way to participate in the airplane revolution without taking on the risks of direct exposure.

Exposure without the exposure

Although Boeing provides direct exposure to the developments taking place in the airline industry, it also exposes investors to the risks of owning a company launching a new product in a risk-averse sector. Hexcel Corporation (NYSE:HXL) and GE both provide vital components to airplane makers and should see their top and bottom lines benefit from the same trends, but with less direct exposure.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company.

The article Buy 787 Suppliers, Not the Maker originally appeared on Fool.com and is written by Reuben Brewer.

Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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