This Company Has Been Around Since 1892, and Its Stock is Up 80% This Year

You might call General Electric the phoenix of corporate America. Because, like that legendary immortal bird, it seemingly has the ability to rise from the ashes of its predecessor.

The company was created well over a century ago, in 1892, by Thomas Alva Edison, the genius American innovator who invented the phonograph, the electric light bulb, and the motion picture camera, among countless other devices and, by the end of his life, held a world-record 1,093 patents.

Over its 133-year history, General Electric has been just as innovative. It created advanced technologies in hydroelectric power, aviation, energy grids, wind power, healthcare, materials science and many other fields.

Image source: Getty Images.

And then it all fell apart like a slow-motion car wreck due to too much diversification, failed business strategies, and a disastrous foray into financial services. Losses at GE's financial unit almost sank the company during the Great Recession. The company's share price plunged more than 80% between 2007 and 2009.

Yet in recent years the stock has been resurrected and has soared since late 2022.

A three-way split

Of course, the GE ticker no longer represents the original conglomerate. Today, it belongs to GE Aerospace (NYSE: GE). The original General Electric company was split into three publicly traded companies beginning in 2021. The other two are GE Vernova (NYSE: GEV), which manufactures energy equipment, and GE HealthCare Technologies (NASDAQ: GEHC), which provides technologies like medical imaging, X-ray and ultrasound systems.

GE Aerospace has fared the best of the three over the past five years. It's up 727% over that time, though GE Vernova's share price has also done well, up 417%. GE HealthCare has climbed only about 20% over five years.

GE Aerospace makes jet and turboprop engines, among other aircraft components, and it's thriving due to the fact that the aircraft manufacturing industry is riddled with bottlenecks and supply problems.

With a market cap of about $321 billion, GE Aerospace had revenue last year of more than $35 billion. That's expected to rise about 16% to almost $41 billion this year. The stock trades at about seven times trailing earnings.

Strong results

The company reported third-quarter results Tuesday morning and they were stellar. Adjusted revenue rose 26% to $11.3 billion and earnings climbed 44% to $1.66 per share. Wall Street expected earnings of $1.46 a share on revenue of $10.4 billion. New orders during the quarter rose 5% to $10.3 billion and defense revenue jumped 26%.

And management raised full-year 2025 earnings guidance to a range of $6 to $6.20 a share from its prior estimate of $5.60 to $5.80.

What's driving that optimism?

Industry problems

In part, it's due to widespread industry supply problems.

Demand for air travel is up, yet the aviation industry is not supplying the aircraft, components, or necessary maintenance to meet it.

Commercial air travel demand grew more than 10% from 2023 to 2024 and is projected to grow at an annual rate of 4.2% through 2030.

But there's currently a severe shortage of aircraft and components due to a production halt during the COVID-19 pandemic, a lack of talent, and an aging global fleet of planes in need of repairs or outright retirements and replacements.

Aircraft engine maintenance and repair has become a "choke point" for commercial aviation, according to consulting firm Bain & Co, with shop turnaround times up 35% for legacy engines and 150% for new engines. Bain says these problems won't even peak until mid-2026 and should last through the end of this decade.

This year has already seen major manufacturing delays at plane makers including Boeing, maintenance problems at engine makers Pratt & Whitney and Rolls Royce (OTC: RYCEY), and a spare parts shortage across the industry.

Any company that can reliably supply jet engines and other components right now is in the sweet spot to profit from that industry crisis. That makes GE Aerospace a good buy at the moment.

Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends GE HealthCare Technologies. The Motley Fool recommends GE Aerospace, Ge Vernova, and Rolls-Royce Plc. The Motley Fool has a disclosure policy.