GE is recovering, making its shares look undervalued

As expected, General Electric (GE) is on the mend, its stock price is reflecting that new reality, and so I'm reiterating my buy rating for the company, first recommended on June 2, 2009 at a price of $13.80. If you took my advice then, you're up 25%.

Institutional investors are looking past GE's likely 12% -15% revenue decline for 2009 to better performance in 2010. As of November, it appeared GE would be fortunate to register flat revenue for 2010, but look for that forecast to be revised upward: GE, a microcosm of the U.S. economy, is recovering. True, there is still the risk that loan default rates will rise, creating more hiccups at the recently-bolstered GE Capital Finance, but the calculation here is that the worst is behind GE Capital and the company's strong, diverse business lines will more than offset the finance's division's short-term negative contributions.