SPH - Better Buy: GE vs. Suburban Propane Partners
There are many different investment approaches, and many different stocks to go along with them. For example, General Electric (NYSE: GE) is an industrial icon that has fallen on hard times. The "story" is all about getting back to its former glory. Suburban Propane (NYSE: SPH), on the other hand, is a consolidator in a fragmented niche of the energy sector. It's an acquisition and cost-containment story.
When you dig into this pair a little more, however, is either story really good enough to get investors to hit the buy button? Maybe -- but maybe not.
As far as turnarounds go, General Electric's efforts haven't gone well. The real pain started during the 2007-to-2009 recession, but the root cause was growing under the surface well before that. Effectively, GE allowed its finance arm to expand into areas far beyond its core purpose of helping customers buy GE products. When the financial crisis hit, the company was forced to take a government bailout, cut its dividend, and sell assets. For a time it looked like a successful turnaround was under way, but sizable investments in renewable power and the energy sector upended the process. The CEO was let go and the company started on another restructuring, with more write-offs and a dividend cut. This process happened once more when the company's turnaround wasn't happening quickly enough for the board or Wall Street.