General Electric Stock Eyes New Support in 2021

The $10 level could be support going forward for GE

Jan 8, 2021 at 8:23 AM

General Electric Company (NYSE:GE) is gearing up to release its first earnings report of 2021 on Jan. 26 before the open. Last year's four reports featured a myriad of post-earnings reactions. There was the good (10.3% pop in January), the bad (4.4% drop in July), and the ugly (8.2% fall in April amid the height of the pandemic.)

GE also has a forward dividend of $0.04 and a forward dividend yield of 0.37%. In this past quarter, the company paid its investors $0.01 per share in dividends.

Despite a hot start to 2021, General Electric stock is still contending with its 12-month breakeven level. However, support could be emerging at the $10 level, which the stock gapped into at the end of November. There's additional chart support in place just above here at GE's 40-day moving average.

ge stock chart

General Electric went from being one of the biggest market cap companies to just one of many, and the reason behind this becomes apparent when taking a closer look at General Electric's fundamentals. GE has seen a drastic and extensive decline in overall sales. In just the past three years, General Electric has lost more than $27 billion in revenue and has simultaneously accumulated $82 billion in debt. General Electric stock's lack of growth coupled with a high price-earnings ratio of 32.26 make GE unattractive from a value perspective for potential investors.

In addition, the company’s big market cap of $99.468 billion means the potential downside could be much greater than the potential upside in the coming years. Nonetheless, GE bulls will pinpoint the company’s recent shift into profitability and its growing net income as a sign of better thing to come.

For those looking to speculate on the former Dow stock's next move with options, now looks to be the perfect time. The security's Schaeffer's Volatility Index (SVI) of 46is in the 17th percentile of its annual range, meaning options players are pricing in incredibly low volatility expectations right now. Plus, GE's Schaeffer's Volatility Scorecard (SVS) sits at 81 (out of 100), indicating the equity has tended to exceed option trader's volatility expectations during the past year.

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