GE stock is a ‘screaming buy,’ a ‘spectacular opportunity,’ strategist says

General Electric shares have fallen 42 percent this year, on pace for their worst annual performance since 2008.

While some may view the stock as a no-touch at current levels, Larry McDonald, founder of the Bear Traps Report, sees it as a "screaming buy," even with the company slashing it dividend in half. Here's why.

• "I'm watching GE because it's a spectacular opportunity. People are heading for the exits at a pace which we haven't seen since the Great Depression, or the 2008 financial crisis," McDonald said Thursday on CNBC's "Trading Nation." He added that this sets up a "very unusual opportunity" to buy the stock, which closed Thursday at $18.25 per share.

• Moody's Investors Service on Thursday downgraded GE's credit quality due in part to "extreme deterioration" in the company's energy business, though it maintained a stable outlook. This doesn't surprise McDonald, who said the credit markets are rather unconcerned with the company's credit quality.

• "It's really an intermediate story. Over the next six months the risk-reward on GE is fantastic, and it's really a screaming buy here," he said.

• The stock has fallen nearly 11 percent in the last week.

Bottom line: McDonald says General Electric stock is a buy at these levels given the risk-reward he sees, and how far the stock has tumbled.

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

Read more

Connect