All across America, huge companies are selling at deep discounts. One of those companies is General Electric (NYSE:GE).
It is one of the most prominent, well-known and successful companies in
the world, yet its shares are selling for prices just shy of half what
traders were getting one year ago.
In fact, GE has not been this cheap in over a decade. The last two
times shares of General Electric were this cheap, investors more than
doubled their money in the following few years.
Imagine having the opportunity to purchase shares of the company for
just $22 this time last year when shares were peaking at $42.
Investors would have pushed their own mothers out of the way for that kind of opportunity.
Let’s face it. General Electric has been in business for a long,
long time. And it will remain in business for an even longer period of
time. Because the company is such a diversified mega-conglomerate it
has the power to withstand immense turmoil.
A Wall Street panic like the one we saw recently is nothing new to
this Blue Chip. GE has endured huge price declines many times in its
past. Each and every time it did, share price rebounded dramatically
higher than where it started.
As I write, GE’s fundamentals are in ranges we have not seen in a
very long time. With a reading of just 9.6, the company’s
price-to-earnings ratio is insanely low. It should be twice that
figure, at least. The downturn has created the ultimate value play.
That is why Warren Buffett recently wrote the company a check for $5
billion so he could get his hands on the profit potential. You do not
become the nation’s richest person by paying too much for something.
Follow his lead.
Shares of GE are priced at levels we should not see except during
the most catastrophic economic events. We are nowhere close to that
situation. Granted, the company’s earnings will suffer over the next
few quarters. But the decline will not be anywhere close to justifying
this huge share price decline.
General Electric is oversold. Warren Buffett knows it. I know it. Now you know it.
Buy shares of the company and wait for the rebound. In just a year
or two, when shares are once again trading for $40 and more, you will
be very, very glad you did.
Discover what it is like to be rich
Since we are following in the footsteps of Buffett, how about we take another piece of his sage advice…
Buffett is constantly discussing his investment philosophy: buy what
you know and use. This theory is why Campbells Soup and McDonalds have
remained relatively unscathed by the credit crunch.
To learn about the next undervalued superstar, all you have to do is
open your wallet. I bet you have a few credit cards stashed in there.
All of the major credit card companies – names like Visa (NYSE:V), Mastercard (NYSE:MA), and American Express (NYSE:AXP) – have seen their valuations drastically reduced during the recent bear market. None of them are as undervalued as Discover Financial Services (NYSE:DFS) and its powerful Discover Card brand.
Selling for less than $11, down from over $32 less than two years ago, shares of the company are a downright steal.
Again, this company and its products are in a very strong position.
No matter what happens in this economy, people will still use their
credit cards.
