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Now Is the Time to Buy GE: Strategists

General Electric, the parent company of CNBC, recently increased its dividend payment for the second time this year. With $20 billion in cash on the balance sheet and the sell-off of its NBC Universal unit expected to meet government approvals, is now the time to buy?

Nicholas Heymann, analyst at Sterne, Agee & Leach, and Ted Parrish, co-portfolio manager of Henssler Equity Fund, say yes.

Parrish says the market was wrong to assume that GE Capital would take the rest of the firm under: "Now we're seeing some improving trends, especially in the UK, the deliquencies are stabilizing and the net writeoffs are trending down. I think this recent dividend hike by [CEO Jeff] Immelt and company is proof of that."

He says although "the company has disappointed in the past year and a half," he is glad to see them refocusing on their industrials business.

"hat is driving value now? "You've got a paradox here..." -Sterne, Agee & Leach, Nicholas Heymann

"They are getting back to business in industrials, because GE is truly an industrial company, and that's why we own the company," Parrish says.

GE estimates its industrials division will grow by about 5 percent next year, a rate Heymann says is due to flat growth in the energy and aviation/aerospace business.

Heymann estimates the stock could be worth as much as $24 per share, when looking at comparable trading multiples for other financial and industrial firms. He says 30 to 40 percent of the company's revenues will come from GE Capital.

He believes what is driving value now is the dividend yield: "You've got a paradox here. Because of the lack of clarity and definitiveness on the industrial pace of recovery, we've turned to the dividend yield to be the primary fulcrum for the shares throughout the end of 2011. Then we have to transition over to an EPS story."

Heymann estimates the EPS could reach $1.75 by 2013, up from under $1 today.

GE's Peers & Rivals:

Citigroup

Siemens

Boeing

United Technologies

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Disclosures:

Ted Parrish's company owns shares of GE. Disclosure information was not available for Nicholas Heymann or his company.

Disclaimer