S&P 500 Index Bear Market: 2 Blue Chip Stocks That Haven't Been This Cheap in Years
It's no secret that the economy is slowing, and investors need to brace themselves for some potentially bad news on earnings in the coming months. However, it's also true that stocks have sold off aggressively in anticipation of it. As such, stocks like industrial giant General Electric (NYSE: GE) and United Parcel Service (NYSE: UPS) now look like excellent value. Here's why.
The industrial giant is symbolic of the value available in the market now. There's no doubt that its near-term earnings and cash flow projections are under threat. However, that threat mainly comes from its inability to overcome supply chain disruptions in its aviation, healthcare, and renewable energy businesses. The ongoing issues are lowering GE's earnings potential and pushing out its free cash flow (FCF) generation.
GE HealthCare (a business set to be spun off in early January) is a case in point. For example, at the recent Morgan Stanley Laguna Conference, GE CFO Carolina Dybeck Happe noted that the GE HealthCare team "has had a tough couple of quarters", but she pointed out that the issue wasn't coming "from the demand side." In fact, GE HealthCare's revenue growth has been significantly held back by supply chain issues in 2022. As such, GE now expects to generate about $3 billion in healthcare profit in 2022 compared to a previous estimate of $3.1 billion to $3.3 billion. She has a point; after all, GE HealthCare orders were up 5% organically in the first half, and the company is likely to deliver on its backlog when the supply chain issues ease.
Source Fool.com
