As the dust settles on the breakup of the industrial conglomerate known as General Electric, markets are still trying to determine how to price different parts of the company. Actions of GE Aerospace (NYSE:GE) traded up 5% Friday as of 10:30 a.m. ET, as investors took a new look at the potential of the aircraft-focused part of the business.
A powerful force released
Amid all of General Electric’s problems over the past decade, aerospace has always been a standout part of the business. The GE stock ticker plunged earlier this week to reflect the fact that its energy business is now trading as a new entity, GE Veronabut the stock is slowly climbing back towards previous highs thanks to the potential of aerospace walk.
GE Aerospace has exposure to some of the best-selling aerospace platforms, including Boeing 737 MAX and the Airbus A320 neo, thanks to its participation in the CFM International engine joint venture.
Both Boeing and Airbus have order books that will last until the end of the decade, providing predictable growth. GE Aerospace could also have opportunities to take market share from its rival RTX thanks to problems with this company’s Pratt & Whitney engines.
Half a dozen analysts have adjusted their price targets on GE downward this week to reflect the fallout, but only one of those targets is below GE Aerospace’s current stock price.
Now Flying Solo, Is GE Aerospace Stock a Buy?
GE Aerospace faces near-term challenges, including Boeing’s ongoing problems with the 737 MAX and questions about how quickly engine makers can ramp up production. But its long-term growth potential is hard to ignore.
For years, even as GE struggled under the weight of its debt load and due to problems in its energy sector and elsewhere, investors marveled at the strength of its aerospace sector and the growth potential that came with it. Now, investors finally have the opportunity to tap into this potential without the hassle of baggage.
For investors focused on the long term, GE Aerospace ranks among the most attractive opportunities in its sector.
Should you invest $1,000 in GE Aerospace right now?
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool recommends RTX. The Motley Fool has a disclosure policy.
Why GE Aerospace Stock Is Rising Today was originally published by The Motley Fool
