Today’s news: General Electric (GE) and Baker Hughes, a GE Company (BHGE) agree to decrease GE’s ownership stake in BHGE; Voya Financial (VOYA) announces higher profit and dividend goals and moves to Strong Buy.
Voya Financial (VOYA – yield 0.1%) issued a press release this afternoon, shortly before the start of its Investor Day at 1 p.m Eastern Time. The company is announcing higher profit goals through 2021, a plan to increase the dividend yield to 1.0% by mid-2019 and a commitment to ongoing share repurchases.
VOYA appears in our Growth Portfolio. I’m increasing my recommendation on VOYA from Buy to Strong Buy. I foresee holding the stock through price resistance at 55—where it will still be quite undervalued—and possibly holding VOYA for its next subsequent upside breakout. Strong Buy.
Baker Hughes, a GE Company (BHGE – yield 3.0%) and its majority owner, General Electric (GE) have agreed to various business changes that will decrease General Electric’s ownership in Baker Hughes sooner than originally planned. That’s because General Electric has been in a poor cash flow position for quite a while, and continues seeking ways out of that predicament.
From the press release:
BHGE and GE also agreed on a release from the lock-up restrictions under their stockholders agreement that previously prevented GE from disposing of shares of BHGE common stock until July 2019.
BHGE and GE agreed to cooperate on a proposed sale by GE of part of its stake into the market and to a concurrent repurchase of another part of GE’s stake by BHGE. Together, these transactions are expected to maintain GE’s stake in BHGE above 50%. GE’s remaining stake will be subject to a 180-day lock-up prohibiting further sales into the market without consent from the underwriting banks.
The two companies will continue pursuing joint business ventures.
I continue to favor ownership in BHGE, and I continue to recommend that investors avoid GE shares. I most recently assessed the GE situation in the October issue of Cabot Undervalued Stocks Advisor. Since that time, General Electric reduced its dividend further, and news emerged of its suffering credit rating.
The price chart on BHGE is not stable. Hold off on buying shares until January 2, when this season’s tax-loss selling is over. Hold.