Here's Why General Electric Company Is Putting Billions into Aviation

General Electric's (NYSE: GE  ) aviation unit -- GE Aviation -- has been 'powering a century of flight' across the globe. During the First World War, the company designed America's first airplane engine "booster" or turbosupercharger, and in the 90-odd years that have passed, it's crossed several important milestones. GE built America's first jet engine and has emerged as one of the world's leading producers of commercial aircraft engines. The company plans to invest $3.5 billion in the aviation unit by 2017. Let's find out what's making the company do so, and whether it will take GE to new highs.

Focus on GE Aviation
It's not difficult to understand why GE is investing so heavily in aviation as the segment generates the lion's share of the company's industrial sales and profits. In the recently concluded second quarter, the segment was the second-highest revenue earner among all industrial businesses. It made up for 22.6% ($6.1 billion) of GE's industrial revenues, losing only to the Power business, which accounted for 23.4% ($6.3 billion). In terms of industrial segment profits, GE Aviation took the ace position, contributing 28.7%, ahead of the Power segment's 27.2%. But this may not be the only reason why GE is pumping $3.5 billion into aviation -- it has also to do with the segment's huge upside potential.

GE Aviation, Source: Flickr

Fuel-efficient engines are in high demand
The U.S. aircraft major Boeing has forecast that between 2013 and 2032, global passenger traffic will increase 5% annually, spurring demand for 35,280 new aircraft. One crucial element that helps traffic grow is attractive fares. But, keeping fares in check isn't easy for airlines as the soaring fuel costs make up one-third of their total operating expense bill. This has turned the tide toward fuel-efficient planes.

Oil-guzzling Boeing 747 or Airbus A380 are fast falling out of favor, prompting aero-majors to come up with new planes and reengineered versions of old planes that score high on fuel efficiency and cost savings.

There's a fuel-save promise attached to the entire new breed, whether it is Boeing's built-from-scratch 787 Dreamliner that boasts "10% lesser cash seat mile costs than peer planes," or reengineered 777X that touts "12% lower fuel consumption and 10% lower operating costs than the competition." The 737 Max aims to "reduce fuel use and CO2 emissions by an additional 14% over today's most fuel-efficient single-aisle airplanes." Airbus' all-new A350 XWB claims to be 25% more fuel-efficient than existing planes, and the reengineered A320neo and A330neo assert 14%-15% savings.

Aircraft makers can live up to their lofty claims with the help of advanced engineering and better engines. And this is where GE Aviation's opportunities lie. The company has an added advantage as its engines are used by all three major commercial aircraft segments -- regional, narrow body, and wide body. Rival Pratt & Whitney serves only regional and narrow-body airplanes, while Rolls Royce caters primarily to the wide-body segment.

GE Testing Next-Gen Jet Engine with 3D Printed Parts, Source: Flickr

A big LEAP
GE has been quick to spot the prospects and is busy building next generation engines for next generation aircraft. Its GEnx engines have already won plenty of accolades and have become the company's fastest-selling engine family, with an order backlog crossing the 1,300 mark. It offers 15% better fuel efficiency compared to the older CF6 engine, and at the same time reduces carbon-dioxide emissions. The GEnx engines power Boeing's 787 Dreamliners.

But GE's latest engineering marvel is the LEAP engine that goes a mile further in delivering performance. The engines will be manufactured in collaboration with Snecma (Safran) of France. GE is using 3D printing (also known as additive manufacturing) to make 19 fuel nozzles for the engine, which could lower fuel costs by 15% and help save up to $1 million annually, per airplane. The LEAP engines will power Boeing 737 Max, Airbus A320neo, and COMAC C919.

The $3.5 billion investment will go into upgrading facilities and equipment around the globe, with a major thrust on the U.S. The plan includes building a LEAP engine manufacturing plant in West Lafayette, Indiana for $100 million. GE will also make LEAP engines at its existing factory in Durham, North Carolina. David Joyce, GE Aviation president and CEO, has said, "Beginning in 2015, the LEAP engine will experience a dramatic production ramp-up for the remainder of the decade." The company wants to ramp up total engine production by 30% to 3,300 engines by 2020 from 2,600 engines in 2013.

Last thoughts
GE is grabbing the opportunity thrown by the booming commercial aircraft market with both hands. The company knows it has a critical role to play in aircraft makers' and airlines' pursuit of fuel-efficient next-generation planes. By establishing new standards of efficiency and fuel savings in engine technology, GE has set its sight on the future of aviation, and newer highs for itself.

You can't afford to miss this
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Biotech Stocks: Time to Worry

Remember when the biotech world was falling apart? Neither do we.

I mean, just look at these returns: Gilead Sciences (GILD) has gained 41% so far this year as investors appear to have put their Sovaldi worries behind them; InterMune (ITMN) has quintupled in 2014 after Roche agreed to purchase it for $8.3 billion; and Intercept Pharmaceuticals (ICPT) has surged 350% as drug trials have been surprisingly good. All told, the iShares Nasdaq Biotechnology ETF (IBB) has risen 21%, more than double the S&P 500′s 8.3% rise.

Steve Remich

It’s time to start remembering, says Weeden’s Michael Purves, who provides four reasons why it the point might be coming to worry about biotech stocks:

1. We are once again entering overbought territory…the daily RSI's are entering levels which typically coincide with a sell off.

2. The current price level of the iShares Nasdaq Biotechnology ETF is right at the March peak, a significant resistance point.

3. I continue to be concerned that the flows continue to come out of the sector – iShares Nasdaq Biotechnology ETF shares outstanding have been trending down since the March price peak.

4. I also wonder how much of the most recent rally is short covering related…the amount of short interest relative to iShares Nasdaq Biotechnology ETF shares outstanding (essentially a more accurate short interest ratio) is at record highs. There is a lag here on the data…so this could be sign of a final squeeze.

Net net, the warning signs are flashing yellow, not red, but I think the hedging discussion with high  prices and lower volatility levels is a relevant discussion.

Shares of Gilead Sciences have dropped 1.3% to $106.11 at 2:23 p.m. today, while InterMune has gained 0.2% to $72.99 and Intercept Pharmaceuticals has jumped 2.3% to $301.18. The iShares Nasdaq Biotechnology ETF has advanced 1.2% to $275.96 today.

Nothing can ground Delta. Earnings fly

  U.S. flights to Israel grounded NEW YORK (CNNMoney) It seems like nothing can stop the aviation industry from its jet fueled joy ride.

Delta (DAL) and Boeing (BA) both reported healthy earnings Wednesday. Delta had a 9% jump in revenue from the year earlier, another sign that after years of consolidation and cost cutting the airline business is continuing to cruise to new highs.

Shares of Delta are already up more than 40% this year, an impressive feat considering the headwinds of 2014, which included winter weather, economic uncertainty, and lots of geopolitical risk in Ukraine, Venezuela and the Middle East, which sent oil prices higher.

Despite all that, people were still flying. Passenger revenue for the airline was the strongest in the U.S., with a 15.7% increase from the same period in 2013. Profit from corporate revenue was especially robust, suggesting that companies are feeling confident enough in the economy to send their employees on the road.

Delta's stock climbed by almost 4% in morning trading Wednesday.

"The airlines are seeing a tremendous amount of traffic right now. They've all figured out how to make money and charge for everything," says Dan Veru of Palisade Capital Management.

Of course, as fees and ticket prices have gone up, so has passengers' griping. Delta experienced an uptick in customer complaints in May compared to the same month last year, according to the Department of Transportation's July Air Travel Consumer Report.

Delta was also in the news this week when it diverted a Tel Aviv-bound flight to Paris after a Hamas-fired rocket landed near the Ben Gurion airport. The FAA has instituted a temporary ban on U.S. carriers from flying to Israel.

Veru said such a move will have very little impact on Delta financially.

  Airlines in currency war with Venezuela

Another winner in the hunt for profit in the skies is Boeing (BA). The aerospace manufacturer also reported solid quarterly earnings, which it said were driven by a 5% bounce in its commercial airplane business as deliveries pick up.

The company is feeling pretty good about the futur! e as well and raised its earnings outlook for the rest of the year.

But investors weren't convinced. Boeing stock was down 2.5% Wednesday.

Boeing made the Malaysia Airlines plane that was shot down in Ukraine last week. On a call with analysts, Boeing CEO W. James McNerney expressed sympathy for the victims and their families and noted this is a "particularly unsettling and painful moment in the history of civil aviation."

More Ways to Save on Back-to-School Shopping

Getty ImagesSometimes you can support the local economy while back-to-school shopping. Back-to-school shopping season is in full swing with big box retailers offering door buster discounts that rival even Black Friday deals. While cheap notebooks and markers aren't nearly as thrilling as bargain flat screens and tablets, the throngs of parents and students crowding the stores suggest otherwise, as do the numbers. According to data from the National Retail Federation, the average family with children in kindergarten through high school will spend $669.28 on back-to-school shopping this year, up roughly 5 percent from last year. Confronted with those increased spending expectations, it's no wonder the crowds are flocking to discount retailers like Walmart (WMT) and Target (TGT) in the hopes of reducing their costs. But while big box stores and online giants like Amazon.com (AMZN) might carry all the necessary supplies at the most competitive prices, they don't always offer the smartest value buys in the long term. Here are some factors and alternatives to consider before rushing to the Walmart "action aisle" to stock up. Consider the local cost. According to a 2011 study, every $100 spent at locally-owned businesses contributes an additional $58 to the local economy. By comparison, $100 spent at a chain store yields just $33 in local economic impact. In other words, shopping at local businesses ensures that more of what you spend will be reinvested back into your community, which means a better local economy, better roads, more support for police, fire and rescue departments and better schools. In recent years, school districts have been facing financial hardship as cuts are increasing and budgets are getting tighter. Because the schools themselves have less money for communal supplies like tissues, copy paper and printer ink, the financial burden gets passed down to parents and students in the form of longer and more expensive back-to-school supply lists. Shopping for those supplies locally rather than online or at the discount giants can infuse more money into the local economy, including the schools. In the long run, that should help lessen the financial burden on parents and students facing back-to-school costs. Go green. With reams of paper and notebooks for every subject made mandatory on just about every back to school supply list, it's easy to forget about being "green." But keeping the environmental impact in mind might actually prove helpful on the savings front. Before hitting the stores, take inventory of what you already have. Any unused or partially used notebooks from last year? Perhaps some binders and folders can be repurposed. Give old pencils a sharpening and bring back dried-out markers with some rubbing alcohol. The more you can reuse and recycle, the better for the environment and your wallet. This "green" principle can also be applied to back-to-school staples beyond the basics, like clothing, backpacks and electronics. Rather than buying new, connect with friends, neighbors and others in the local community to barter, swap and save. Sites such as Craigslist and Freecycle offer good starting points for scoring reusable supplies at a discount. For more specialized items like graphing calculators, try approaching last years' graduates or see what's available on eBay. Either strategy is a simple way to ensure reuse in addition to significant savings. Teach the lesson. In the rush to get everything prepped for the first day, there's a tendency to exclude the students themselves from the back-to-school purchasing process. While it might be easier to push through the crowds solo, parents miss a huge opportunity to teach important monetary lessons by leaving the kids at home. Back-to-school season is an ideal time to provide children with a hands-on financial education. Get them involved in setting and sticking to a budget for their supplies. Obviously a kindergartner will be a lot more passive in the process than a high school student, but instilling the lessons of comparison shopping, couponing, choosing brand name or generic, assessing price versus value and differentiating needs from wants early on and with more responsibility and involvement each year can prove incredibly valuable in preparing a child for his or her financial future. As you tackle your back-to-school shopping this year, consider what's beyond the bottom line before hitting the stores. With these things in mind, you might find yourself and your kids shopping smarter. .

Windstream Holdings, Inc. Earnings: Solid Progress Toward a Tax-Efficient REIT Future

Source: Windstream.

Windstream Holdings (NASDAQ: WIN  ) reported second-quarter results on Thursday morning. The regional telecom and business-focused data services specialist saw sales fall 2% year over year, landing at $1.47 billion. Windstream grew its list of enterprise customers by 3%, while all other divisions reported annual subscriber shrinkage.

GAAP earnings came in at $0.02 per share, down from $0.06 per share in the year-ago period. Adjusted OIBDA earnings, which is a non-GAAP metric that's closer to an operating cash flow measure than to tax-accounting GAAP income, fell 7%, to $543 million.

Source: Windstream.

Both sales and earnings fell short of Wall Street estimates, as analysts were looking for earnings of $0.06 per share on $1.48 billion in pro forma sales.

In a prepared statement, CEO Jeff Gardner underscored Windstream's focus on business services. "We have expanded our business marketing programs to strengthen sales and are seeing continued solid sales momentum and positive trends supporting our efforts to move up-market," he said.

In the shrinking consumer channel, Windstream is doubling down on marketing and sales efforts, including a number of new discount plans to drive higher subscription volumes.

All told, Gardner called the quarter "solid and largely in-line with our expectations," holding Windstream's full-year revenue and cash flow guidance firm despite the slight misses against Wall Street estimates.

What's next?
These results will soon be tough to use in year-over-year comparisons. At the end of July, Windstream announced plans to split its operations into two separate businesses.

In a spin-off deal that's expected to close in the first quarter of 2015, Windstream aims to set most of its network assets apart in a publicly traded real estate investment trust, or REIT. The service company will lease network infrastructure from the asset entity. The IRS has already approved this move, but Windstream still has a number of regulatory hurdles to clear before making the change.

For Windstream, it's a tax-effective move that would reduce the core company's $8.5 billion debt load by about $3.2 billion, and yield more than $100 million in annual tax savings. To put these savings into context, Windstream's annual income taxes have hovered around $100 million since 2011.

Shareholders will gain the ability to invest in Windstream's service operations or its asset-heavy network business. Both entities are expected to continue paying dividends, but at very different rates. To qualify as a REIT, the networking operation must pay at least 90% of its taxable income in the form of dividends. It should come as no surprise to see Windstream planning an annual dividend payout of $0.10 per share for the service section, and a far heftier $0.60 per share in the networking segment.

So, the Windstream stock you own today is likely to look very different a year from now. Some investors will choose the service track, hoping for a turnaround based on business-class products. If that pays off faster than the landline phone service withers and dies, this option could pay off handsomely.

But that's a high-risk bet. Most investors will simply buckle up for negligible growth, low volatility, and handsome dividend yields in the network assets portion of today's Windstream.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

U.S. Stocks Turn Red; 21st Century Fox Shares Surge On Upbeat Results

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Midway through trading Thursday, the Dow traded down 0.32 percent to 16,391.07 while the NASDAQ declined 0.14 percent to 4,348.92. The S&P also fell, dropping 0.35 percent to 1,913.61.

Leading and Lagging Sectors

Utilities shares surged around 0.57 percent in today’s trading. Meanwhile, top gainers in the sector included Empresa Distribuidora y Comercializadora Norte S.A. (NYSE: EDN), up 2.9 percent, and PNM Resources (NYSE: PNM), up 1.7 percent.

In trading on Thursday, healthcare shares were relative laggards, down on the day by about 0.62 percent. Meanwhile, top decliners in the sector included Thoratec (NASDAQ: THOR), down 28.4 percent, and PhotoMedex (NASDAQ: PHMD), off 14.6 percent.

Top Headline

Brinker International (NYSE: EAT) reported a drop in its fourth-quarter profit. However, the company's revenue topped analysts' estimates.

The Dallas, Texas-based company posted a quarterly profit of $28.8 million, or $0.43 per share, versus a year-ago profit of $46.4 million, or $0.64 per share. Excluding items, its earnings climbed 10.4% to $0.85 per share from $0.77 per share.

Its total revenue gained 3.9% to $758.7 million. However, analysts were expecting earnings of $0.86 per share on revenue of $749.7 million.

Equities Trading UP

Lehigh Gas Partners LP (NYSE: LGP) shares shot up 24.13 percent to $32.25 after CST Brands (NYSE: CST) announced its plans to acquire Lehigh Gas GP LLC, the general partner of Lehigh Gas Partners LP. Lehigh Gas Partners also reported its financial results for the second quarter.

Shares of Twenty-First Century Fox (NASDAQ: FOXA) got a boost, shooting up 6.53 percent to $34.44 after the company reported upbeat fourth-quarter results. Cowen & Company upgraded 21st Century Fox from Underperform to Market Perform and raised the price target from $29.00 to $35.00.

Stratasys (NASDAQ: SSYS) shares were also up, gaining 17.72 percent to $116.44 after the company reported better-than-expected quarterly results and lifted its forecast.

Equities Trading DOWN

Shares of Thoratec (NASDAQ: THOR) were down 28.46 percent to $23.30 after the company reported downbeat second-quarter sales and issued a disappointing 2014 earnings outlook.

Atmel (NASDAQ: ATML) shares tumbled 7.50 percent to $7.96 after the company reported in-line Q2 earnings. Bank of America downgraded Atmel from Buy to Neutral.

Melco Crown Entertainment (NASDAQ: MPEL) was down, falling 3.25 percent to $29.04 after the company reported downbeat quarterly results.

Commodities

In commodity news, oil traded down 0.20 percent to $96.73, while gold traded down 0.02 percent to $1,308.00.

Silver traded down 0.39 percent Thursday to $19.95, while copper rose 0.36 percent to $3.18.

Eurozone

European shares were lower today. The eurozone’s STOXX 600 fell 0.71 percent, the Spanish Ibex Index dropped 1.79 percent, while Italy’s FTSE MIB Index tumbled 2.10 percent. Meanwhile, the German DAX fell 0.99 percent and the French CAC 40 declined 1.40 percent while UK shares dipped 0.65 percent.

Economics

US initial jobless claims declined 14,000 to 289,000 in the week ended August 2. However, economists were expecting claims to reach 304,000 in the week.

Natural-gas supplies climbed 82 billion cubic feet in the week ended August 4, the Energy Information Administration reported. However, analysts were estimating a rise of 81 bcf to 85 bcf.

Data on consumer credit for June will be released at 3:00 p.m. ET.

Data on money supply will be released at 4:30 p.m. ET.

Posted-In: Earnings News Guidance Upgrades Eurozone Futures Price Target Commodities

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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10 Insurance Stocks to Sell Now

Popular Posts: 10 Best “Strong Buy” Stocks — TRGP YY ILMN and more11 Biotechnology Stocks to Buy Now10 Oil and Gas Stocks to Buy Now Recent Posts: Hottest Financial Stocks Now – NSM HNT FBP ASPS Biggest Movers in Healthcare Stocks Now – IRWD IPXL SGEN PCRX Hottest Technology Stocks Now – PEGA AOL ATVI BITA View All Posts 10 Insurance Stocks to Sell Now

This week, the ratings of 10 insurance stocks on Portfolio Grader are down. Each of these rates a “D” (“sell”) or “F” overall (“strong sell”).

Axis Capital Holdings Limited’s (AXS) rating falls to a D (“sell”) this week, down from C (“hold”) the week prior. Axis Capital Holdings provides various insurance and reinsurance products to worldwide operations. To get an in-depth look at AXS, get Portfolio Grader’s complete analysis of AXS stock.

Meadowbrook Insurance Group, Inc.’s (MIG) rating falls this week to an F (“strong sell”), down from last week’s D (“sell”). Meadowbrook Insurance Group provides alternative risk management programs and services. The stock gets F’s in Earnings Revisions, Cash Flow and Sales Growth. For more information, get Portfolio Grader’s complete analysis of MIG stock.

This week, Crawford & Company Class B (CRD.B) drops from a C to a D rating. Crawford & Company is an independent provider of claims management solutions to insurance companies and self-insured entities. To get an in-depth look at CRD.B, get Portfolio Grader’s complete analysis of CRD.B stock.

The rating of State Auto Financial Corporation (STFC) slips from a C to a D. State Auto Financial is a property and casualty insurance company engaged in writing personal and business lines of insurance. The stock also gets an F in Earnings Momentum. For more information, get Portfolio Grader’s complete analysis of STFC stock.

Erie Indemnity Company Class A (ERIE) is having a tough week. The company’s rating falls from a D to an F. Erie Indemnity is involved in the property/casualty insurance business. The stock also gets an F in Earnings Surprise. To get an in-depth look at ERIE, get Portfolio Grader’s complete analysis of ERIE stock.

Progressive Corporation (PGR) earns an F this week, falling from last week’s grade of D. Progressive is an insurance holding company that offers primarily personal and commercial automobile insurance, in addition to other property-casualty insurance products. Shares of the stock are changing hands at twice the rate they were a week ago. For more information, get Portfolio Grader’s complete analysis of PGR stock.

Slipping from a C to a D rating, Aspen Insurance Holdings Limited (AHL) takes a hit this week. Aspen Insurance Holdings provides insurance and reinsurance solutions worldwide. Shares of the stock have been trading at an exceptionally rapid pace, up twofold from the week prior. To get an in-depth look at AHL, get Portfolio Grader’s complete analysis of AHL stock.

Validus Holdings, Ltd. (VR) earns a D this week, moving down from last week’s grade of C. Validus Holdings provides reinsurance and insurance coverage in the property and marine markets. The stock also rates an F in Earnings Surprise. For more information, get Portfolio Grader’s complete analysis of VR stock.

The rating of Cincinnati Financial Corporation (CINF) slips from a D to an F. Cincinnati Financial markets property casualty insurance through independent insurance agents. The stock gets F’s in Earnings Momentum and Earnings Revisions. To get an in-depth look at CINF, get Portfolio Grader’s complete analysis of CINF stock.

This week, OneBeacon Insurance Group, Ltd. Class A (OB) drops from a C to a D rating. OneBeacon Insurance Group offers specialized insurance products and services. The stock also gets an F in Sales Growth. For more information, get Portfolio Grader’s complete analysis of OB stock.

Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.