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This Industrial Stock Could Make You Rich
Key Points
GE Aerospace is down 12.6% from its 52-week high, but that slump may be inviting.
It’s not a defense-dependent aerospace stock.
Getting rich is hard. If it were easy, there'd be more millionaires. Fortunately for investors eyeing the seven-figure club and beyond, there's wisdom that can smooth the road to riches.
First, patience is a virtue. Second, embracing quality stocks on pullbacks or in corrections can be rewarding. The world of industrial stocks serves up some quality candidates trading well off recent highs, including GE Aerospace (NYSE: GE). As of Monday, Nov. 9, shares of the commercial jet engine behemoth traded nearly 13% below the 52-week high, indicating a buy-the-dip opportunity may be afoot.
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GE Aerospace could be a millionaire-maker stock for patient investors. Image source: Getty Images.
Investors may not want to drag their feet on that opportunity, as the stock is showing signs of life, highlighted by a 7.1% rally last week. Renewed enthusiasm for GE Aerospace and the possibility of an extended resurgence are understandable. In the third quarter, the company's commercial jet engine segment notched 21% revenue growth and an operating margin of 28%. Even with macroeconomic uncertainty looming large in the commercial aircraft industry, GE Aerospace raised its full-year top- and bottom-line guidance, potentially boding well for the stock's long-term wealth-building prospects.
Another factor that augurs well for GE Aerospace's potential status as a wealth-creating stock is the robust commercial aircraft aftermarket. Put simply, some global airlines aren't taking delivery of new planes on schedule. They're opting to conserve capital by extending the lives of older jets, driving a third-quarter surge in orders for GE Aerospace's aftermarket services.
Additionally, retirement rates for older commercial aircraft are declining, underscoring why GE Aerospace has several years of visibility in aftermarket demand, providing revenue clarity that many investors crave.
The recent winds of political change may also be additive to the GE Aerospace thesis. Pure-play defense stocks were sapped on speculation that change of control could result in spending cuts to some defense programs. GE Aerospace has a defense business, one that grew revenue at a 7% pace in the third quarter. Still, the company is considered less vulnerable to the new political climate than its defense-specific peers.
Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends GE Aerospace. The Motley Fool has a disclosure policy.