After a tumultuous year that saw General Electric Co stock tumble to 18-year lows, then whipsaw back to triple that level, shareholders of the largest U.S. conglomerate may be in for a year of few, if any, gains.

GE Chief Executive Jeff Immelt last month told investors he expects profit at the company's big industrial units -- which make jet engines and electric turbines -- to be in a word, flat, which aptly describes GE's overall 2010 prospects.

Sluggish demand for heavy equipment and the hangover of the credit crunch on its hefty finance arm could set the stage for little movement in GE shares, investors said.

They're going to continue to struggle. From an earnings standpoint, they can certainly get some wind behind them on the industrial side. Things will be tougher on the financial side, said Peter Klein, senior portfolio manager at Fifth Third Asset Management in Cleveland, Ohio. Referring to the stock, he added, It'll go sideways for a while.

The Fairfield, Connecticut-based blue-chip company's portfolio will be in flux this year, as its deal to sell a majority stake in its NBC Universal media business to No. 1 U.S. cable operator Comcast Corp  faces regulatory scrutiny and the company continues to pare back its GE Capital finance unit.

Wall Street analysts, on average, have a 12-month price target of $18 on GE shares, according to Thomson Reuters I/B/E/S. That represents a 16 percent rise from the stock's current level at around $15.50.

PORTFOLIO NOISE

While GE's equipment arms have strong growth prospects in emerging markets, including China, India and the Middle East, their performance will be offset by continued concerns about other business units, investors said. That marks a contrast to more focused industrials, including United Technologies Corp  and Caterpillar Inc , which have outperformed GE and the broader market over the past year.

GE shares are currently trading at about 15.5 times forecast earnings, a premium to the forward price-to-earnings ratio of 13.5 for the Dow Jones industrial average <.DJI> but a discount to Caterpillar's 29.5 and United Technologies' 17.2.

Wall Street also expects profit growth from those companies this year, with analysts forecasting a 35 percent profit rebound at Caterpillar and a 12 percent rise at United Tech.

Worries about GE's finance arm have been the main drag on the stock, which tracked the financial sector closely during its heavy slide in the early part of 2009. Further scaling back finance and selling NBC could prompt investors to shift focus off GE Capital -- which is facing rocky going in its commercial real estate portfolio -- and on to the better-performing industrial units.

As they grow the infrastructure business and shrink the rest of the portfolio, it will start trading more like an industrial, said Matt Collins, capital goods analyst at Edward Jones, in St. Louis. That strategy is already in place.

GE management has begun telling Wall Street that the company is no longer in a defensive position financially and is interested in buying back the preferred shares it sold in 2008 to Warren Buffett's Berkshire Hathaway Inc , though its earliest opportunity to do so is October 2011.

In the meantime, the big risks the company faces -- apart from another sharp slump in the global economy -- are a further downturn in the commercial real estate sector and arduous new regulations on GE Capital.

The good news, bigger picture, is that the key risks are better understood now versus a year ago, said Collins. You have to have a longer-term focus to want to own this stock. You're looking at flat earnings this year, while the typical industrial will be up.

Having a flat run ahead puts long-term GE shareholders in a familiar position. The stock showed little movement through the middle years of the past decade.
Some shareholders are questioning how much growth the stock could experience once it puts the downturn behind it.

Is it still going to face that conglomerate discount? asked Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors in Cincinnati, which holds GE shares. We think it's cheap relative to its intrinsic value. In the mid-$20s, we might be looking to sell out and move on. In terms of real growth, we've been looking elsewhere.

(Reporting by Scott Malone; editing by John Wallace)