Despite Job Cuts, GE Stock Has Long, Hard Climb Back To $20

Right there on page 3 of General Electric's (NYSE:GE) 2019 10-K, the company informed investors that it had 205.000 global employees at the end of December, with 70,000 of those employees working in the U.S. Over the past year, GE cut 78,000 jobs from its workforce to right the business and balance sheet, and GE stock moved higher in 2019 as a result. Source: testing / Shutterstock.com However, over the past eight days of trading, GE has lost ground every day, dropping from $13.16 on February 12 to $11.32 on February 25. That's a 14% decline, or 1.75% a day. GE hit a 52-week high on February 12, the stock's highest point since October 2018. It hasn't traded above $20 since November 2017. Whether you believe the job cuts are enough, GE stock is going to have a tough time getting back to $20. InvestorPlace - Stock Market News, Stock Advice & Trading Tips GE Skeptics Come Out Sure, a chunk of the declines is due to the markets imploding over the ongoing surge in coronavirus cases. Still, long-time skeptics such as JPMorgan analyst Stephen Tusa, aren't necessarily falling for the turnaround rhetoric being sold by CEO Larry Culp at the moment. * 7 Safe Stocks to Buy on the Coronavirus Dip Reports suggest that Tusa believes the headcount is essentially unchanged from 2018. He gets to that conclusion by excluding the 74,000 employees employed by its oil & gas and transportation businesses, which were sold in 2019. For a company facing severe issues, a 2% cut in the number of employees could hardly be considered reducing the cost structure. In January, I said that I didn't expect enough good news to come out of GE's Q4 2019 results. Almost a month removed from the announcement, it's clear the initial excitement from earnings release has worn off. GE stock gained 7% on January 29 after announcing earnings before the markets opened. However, now that the analysts have had time to digest the 10-K, they aren't being shy about the issues facing GE.In addition to saying the headcount is unchanged, Tusa believes that the Boeing (NYSE:BA) 737 MAX isn't the only thing causing its aviation business troubles, and lastly, and probably the most important point from the analyst, is that the positive free cash flow it put up in 2019 is a one-time thing due to restructuring and "unsustainable progress payment benefits" realized during the past fiscal year.If Tusa thought there was more meat on GE's bones, he would have upgraded the stock from underweight and raised his target price above $5. The fact that he hasn't tells volumes. Over the past year, GE's stock's has a total return of 6.5%, with most of those gains coming in the second half of the year as it dug itself out of the hole it had fallen into during the summer, hitting a 52-week low of $7.65 in August. From that low, despite the eight-day decline, GE is up an impressive 48%. In my opinion, the low lying fruit's already been picked. To get to $20, it's going to need skeptics such as Tusa to at least turn neutral, if not bullish. The analyst's latest comments suggest he's not about to change anytime soon. The Bottom Line on GE StockGeneral Electric is not a stock that I would buy above $10. It certainly isn't a stock Stephen Tusa would own. However, there are plenty of experts who believe CEO Larry Culp has the right stuff to turnaround the industrial conglomerate. InvestorPlace contributor Brad Moon recently discussed a sign Culp's turnaround is gaining traction. Canada's British Columbia Investment Management Corporation (BCI), which manages $153.4 billion in assets for the province of B.C.'s public sector, increased its stake in GE by 50% in the final quarter of 2019. If that's not a sign GE's a buy, nothing is. Of course, I'm pulling Brad's leg. All jokes aside, he makes an excellent point that big institutional investors like BCI do not increase their stakes to this degree without a level of comfort in the future. For this reason, I won't say GE is a sell. However, I also can't say it's a buy trading in double digits. If it falls back to $8, I might be persuaded to change my tune. At this point, I don't see $20 in the cards anytime in 2020 and possibly not even in 2021.Will Ashworth has written about investments full-time since 2008. Publications where he's appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Safe Stocks to Buy on the Coronavirus Dip * 7 Stocks to Buy Down 10% in the Last Week * These 4 Stocks to Sell Are Melting Down Now The post Despite Job Cuts, GE Stock Has Long, Hard Climb Back To $20Â appeared first on InvestorPlace.

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