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Investors can’t seem to look past the Middle East, but GE’s core business continues to grow.

GE Aerospace stock declined 23% from early March to April 22, following revised air travel growth expectations and Middle East concerns.

The company reported Q1 commercial aerospace profit margins of 26.4%, an increase of over seven percentage points from Q1 2024.

Analysts project 15% annual earnings growth and an average price target of $347, with 85% rating shares Buy.

Stock market corrections are painful. They can also be healthy, checking overly exuberant investor enthusiasm and ensuring some risks are reflected in stock prices. Corrections can also be buying opportunities. Investors should use the recent selloff in aerospace stocks to snap up shares of an industry leader: GE Aerospace.

GE Aerospace (don’t call it General Electric) stock has been unfairly punished since its first-quarter earnings report, with investors’ gaze now narrowly focused on the Middle East rather than on a horizon filled with more planes powered by GE’s aircraft engines. While that is understandable, it’s also unfair to GE’s prospects as a business. The stock can hit $350, up 15% from recent levels.

Problems started for GE Aerospace stock in March, right after missiles started flying in Iran. Between the start of the war and the company’s first-quarter earnings report, shares declined 11% as investors worried about high oil prices affecting travel demand. GE quantified those fears on April 21 when it reported better-than-expected earnings and left its 2026 earnings guidance unchanged, which calls for about 15% earnings growth. Not a bad result.

Unfortunately, the company also revised its global air-travel growth expectations from mid-single digits to flat to low-single digits. That’s all it took to send shares down almost 6%.

“No good deed goes unpunished,” wrote Vertical Research Partners analyst Rob Stallard after earnings. “GE could have chosen not to update its guidance for the potential war impact, stating that the situation is still too unpredictable….Instead, it took the prudent approach, trimming some of the underlying business drivers.”

Investors didn’t appreciate the prudence. Shares dropped as low as $268.91 on April 22, down 23% from their early-March levels. Declines have left shares trading for about 40 times earnings expected over the coming 12 months, roughly equivalent to the multiple from a year ago. That’s a premium to the S&P 500’s 22 times multiple, but GE Aerospace has a lot of growth ahead. Earnings per share are expected to grow at a rate north of 15% annually over the next three years. There will be more growth after that, as new engines mature and the more lucrative aftermarket parts and service stream ramps up.

“Absurd reaction after their excellent Q,” says Stephanie Link, Hightower’s chief investment strategist, adding that she bought more shares after the report. “People are getting nervous about the Middle East conflict and the airlines cutting capacity. I think it’s a buying opportunity. The backlog alone is reason for owning.”

Backlogs in the commercial aerospace industry have never been larger. Boeing and Airbus have unfilled orders for some 15,000 commercial jets valued at north of $1 trillion. GE Aerospace’s total backlog sits at $210 billion. Its commercial services backlog is $170 billion, up nearly $30 billion since the end of 2024.

trong backlogs and growth are nothing new for the commercial aerospace business. Air travel grows at about 5% annually, driving demand for new planes. Boeing and Airbus, however, have had trouble delivering those planes amid Boeing’s internal woes, Covid, and supply-chain problems that have persisted since the pandemic. Since 2020, there have probably been 3,000 or 4,000 planes that airlines would have taken but were never built.

Many of those jets will have GE Aerospace engines underneath the wing. The company and its partner Safran have a dominant 75% market share in single-aisle jets. It also has a strong position in twin-aisle jets, competing with RTX and Rolls-Royce.

GE Aerospace “also has that crucial balance between OEM and aftermarket sales, with its large installed base more than offsetting the losses that come with new engine deliveries,” says Stallard. New engines are typically sold for a loss, with profits coming later. That’s a longstanding feature of the industry.

Stallard rates shares Buy and has a $358 price target.

The company’s defense propulsion business, which accounts for about one-quarter of sales, is also booming, growing 19% year over year in the first quarter. It supplies engines for F-16 fighter jets, Apache helicopters, and others. GE Aerospace’s new XA102 is vying to power the Air Force’s F-47 sixth-generation fighter jet. The XA102 uses advanced technology to combine the fuel efficiency of a turbofan engine with the power of a turbojet (or a low-bypass turbofan, for readers about to write in).

Engine development is key to maintaining GE Aerospace’s market share. In 2025, it spent almost $3 billion on research and development, including “customer and partner” funding (mostly government contributions), or roughly 7% of sales. Other players spend billions on development, too, but the tri-opoly nature of the industry makes it easier to earn a return on that investment.

Oil prices are a threat to the stock, but even higher oil prices can drive demand for more fuel-efficient engines, so long as the economy stays stable amid those higher prices. The bigger risks for investors are persistent supply-chain problems and business execution.

Both risks are being actively managed by CEO Larry Culp, who arrived at GE in 2018 and is credited with turning the unwieldy American industrial conglomerate around. He is a disciple of lean management techniques developed in Japan that focus on collaboration and continuous improvement. GE’s lean efforts extend beyond the company into the supply base, to ensure high quality and more output.

Output from suppliers was up “double digits” year over year and turnaround times at GE maintenance facilities were improving, Culp tells Barron’s.

Lean shows up in GE’s financial statements, too. First-quarter profit margins in the commercial aerospace business were 26.4%, up more than seven percentage points from the first quarter of 2024, just before the GE Vernova spin.

Currently, Wall Street projects $9.80 in 2028 earnings per share. That justifies a $350 share price target in 12 to 18 months. With lower oil prices and improved execution, that 2028 number could easily top $10. GE is working on a streak of 14 consecutive quarters of topping Wall Street expectations.

Wall Street loves the stock. About 85% of analysts covering the company rate shares Buy, about 30 points above the average Buy rating for stocks in the S&P 500. The average analyst price target is $347 a share.

Wall Street approval certainly isn’t required for a stock to work. Still, it doesn’t hurt.

Merrill’s Raj Bhatia and his team run proprietary investment strategies that are also available to other advisors at the Bank of America wealth management unit.

The prowess of financial advisor Raj Bhatia’s team at Merrill Private Wealth Management puts it in high demand. Not only does it manage money for its own clients; it also does so for clients of other advisors at Merrill, a unit of Bank of America. Bhatia says he and crew run proprietary investment strategies that rely on their own experience and expertise, along with Bank of America’s extensive investment research. Those strategies are monitored by the company’s Investment Solutions Group.

Bhatia has worked at Merrill since 1981. Ariana Bhatia, his daughter, joined her father’s team after stints at Goldman Sachs and private investment firm Vistria Group. She says that their approach to managing capital resonates with clients and fellow advisors. The Bhatias spoke Barron’s about their approach to managing portfolios and how they decided to pair up. Their team is based in Chicago and Naples, Fla.

Barron’s: Tell me about your practice. What kind of clients do you serve?

Ariana Bhatia: There are 13 of us on the team managing approximately $3.4 billion. The majority of Bhatia Group clients are families who have built their wealth through owning a business, roles as corporate executives, or as principals of private-equity or venture-capital platforms.

A lot of times, people come to us looking for a solution to a problem. That could be managing liquidity from the sale of a business or managing wealth across generations. Over time, what tends to resonate is our perspective around managing capital. We look at the whole client and focus on how economics compound over time.

Raj Bhatia: We work with about 150 client families. In addition to that, we manage $1 billion of partner client assets, that is, clients of other Merrill advisors. Merrill Lynch’s Investment Solutions Group monitors our numbers. This is another part of our services that we offer our clients and other Merrill advisors.

So, you are managing money on behalf of other financial advisors in addition to your own clients?

Raj: Yes. It’s a discretionary advisory service. We form a pool with about 40 other advisors in the country, and they add to the pool a specific client’s account that can be devoted to our strategies. My team runs it. We’ve been doing this since 2012. Merrill ISG started to audit our numbers in 2017, so there’s a formal process.

Ariana: This is one of the aspects of our work that we find meaningful because advisors are reaching out to us to collaborate. They lead the client relationship, obviously, but look to our team for an investment strategy. It resonates with them. And it’s a structured process.

Investors seeking active management typically look for three things: consistent excess return, thoughtful risk mitigation, and flexibility. Our discretionary strategies are built with the goal of delivering across all three vectors. The Bhatia group philosophy differentiates itself through an economic value-added framework, combined with deep qualitative research from BofA Global Research. Our focus on understanding how companies generate and compound economic profits has resonated with our clients and advisor partners, who have sought us out over the years.

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Advisors and clients have told us they value our pedigree as seasoned allocators and investors; our investment committee has experience investing across public equities, private equity, private credit, and real estate. We have evaluated a broad universe of strategies and intentionally built something differentiated that aims to follow the value through regime shifts in the market, rather than getting stuck in one style box. Our Merrill advisor partners also value the direct access they have to us for timely, transparent insight as markets change.

Raj: I’ve lived through hurricanes in the market. This experience allows us to build stronger portfolios for clients. One challenge all advisors face is how do you navigate the complexity and volatility of markets.

Ariana: Raj is known for saying on client calls that we can’t stop the hurricanes but we can build a better boat.

How does the strategy get implemented?

Raj: There are two halves to the process. The first part is BofA Global Research—what an analyst writes in terms of ideas and research reports can generate a candidate. We take that and add our lens; we go one step further. That is core to our philosophy.

Ariana: If you think about it, “economic profits” is a very established framework, just as GAAP [generally accepted accounting principles] is. There are thousands of research reports. It’s not something we are just picking up.

What are economic profits?

Ariana: So, pretend you have a restaurant, and you have $1 million revenue and $600,000 in costs. That’s your staff, debt, food. GAAP will say you have $400,000 in profit. The economist might say, “Hey, you might not have $400,000. What about what you owe your brother-in-law who invested in your business?” If you look at that [bigger picture], your profit might be lower. It might be zero. It raises the bar for evaluating things more broadly.

Raj: I have watched BofA Global Research up close for many years. I have used their good thinking, and that generates a lot of great thoughts. But we need a funnel, or sieve, to help identify candidates that work exceptionally well over a period of time.

How do you approach the rest of the client portfolio?

Ariana: We think about the role that various asset classes can play in a portfolio. There is more than just what people traditionally come to us for, which is cash, fixed income, and public equities. We think in a much broader lens. We think about active management. We think about private equity and hedge funds. And if you think across the risk spectrum, you think about things that can generate income. That may be real estate or fixed income. So, there are a lot of different buckets, and a lot of thought goes into sizing those buckets and building out the portfolio.

Raj: Diversification is key. That is the only free lunch in the markets. Everything else is a trade-off between risk and return.

Why actively manage the strategies yourself, instead of relying on third parties to do it?

Ariana: When people invest, they can invest passively or actively. Both have roles in a person’s portfolio. When they do go active for a piece of the portfolio, investors look for three things: return, risk mitigation, and customization, especially at higher asset levels. When you look for these three things, you look for people who do it best.

Raj: For seven years, I asked Ariana [to join the team], and she said no for seven years. I went to our co-presidents and said, “I need your help convincing my daughter to join my team.” And they spent a day with her and convinced her. There are now five partners on the team [the Bhatias, Shen Li, Iain Mirrilees, and Matt Gebert]. If I get hit by a bus, our clients and portfolios will be taken care of.

Ariana: My background is in institutional investing, private equity, and real estate. When I think about my career long term, I love investing, but it ultimately comes down to transactions versus relationships. If you think about the role our team plays, we are investors, but we have these great relationships with clients and help them achieve their goals. That is really meaningful work.

So, yes, Raj did ask me every year, but I wanted to make sure that I explored everything. It’s an important decision. You want to make doubly sure and bring real value to the team.

Markel has improving insurance operations, a sizable equity portfolio, and a low valuation relative to specialty insurance peers.

Markel Group is the best known of the so-called mini Berkshire Hathaway's that combine insurance, stock investments, and wholly owned businesses.

Like Berkshire, Markel has attracted a dedicated shareholder base in the 40 years since it went public. The stock is up 225-fold to $1,800 from $8 at its 1986 initial public offering—but still behind the 300-fold gain in Berkshire over that span.

The company’s CEO, Tom Gayner, 64, is a longtime fan of Berkshire and told an audience in Omaha, Neb., before the Berkshire annual meeting recently that Markel has “studied the playbook.”

The stock is worth buying now, closing at $1,800 a share on Thursday.

Markel trades for about 1.2 times its March 31 book value of $1,450 per share—below its average of close to 1.4 times in the past few years—and for 13 times projected 2026 operating earnings.

The stock also trades way below Markel’s own estimate of its intrinsic value of about $2,900 a share. If the stock rises slightly, Markel’s market cap would be sufficient for the company’s potential inclusion in the S&P 500 index.

The company has improving insurance operations, a sizable equity portfolio of $12 billion that gives it more bang from stock market gains than most insurance peers, some appealing noninsurance businesses, and a low valuation relative to specialty insurance peers like W.R. Berkley, RLI, and Kinsale Capital Group.

Markel has attracted an activist investor, Jana Partners, which took a Markel holding in late 2024 that is now under 1%. It sent a letter to the Markel board in late April after the company’s first-quarter earnings missed expectations and urged the company to sell the noninsurance units and buy back $2 billion of stock, or just under 10% of the current market value of $22.5 billion.

“The stock has been as cheap as it has been in the past 10 to 15 years” on a price-to-book basis, says Charlie Frischer, who runs a Seattle family office and owns the shares. Frischer thinks the activist presence will pressure management to become more shareholder-friendly.

That already seems to be happening. Gayner said on the company’s earnings conference call in late April that Markel would be accelerating its stock-repurchase program and that buybacks now are Markel’s best form of capital allocation. He said the company would repurchase 10% of its stock in under five years.

The other bullish development for Markel is that its core insurance operations are improving under the leadership of Simon Wilson, who took full control of the insurance business in 2025 after heading its successful international operations.

The company’s underwriting profit margin rose three percentage points in the first quarter, with the company showing a combined ratio of 93% versus 96% year ago. A combined ratio is expenses and losses as a percentage of insurance premiums—a lower figure is better.

Like Berkshire and Fairfax Financial Holdings, a Canadian insurer that follows the Berkshire model, Markel is out of favor with investors. All three stocks are behind the S&P 500 over the past year.

The recent underperformance at Markel reflects its exposure to the property-and-casualty insurance market, where pricing is weakening after years of strength. It’s also an asset-rich defensive stock in a market favoring technology and growth. If its insurance business weakens again, that could hit Markel’s stock price.

Markel didn’t help itself with a disappointing first-quarter profit report in late April that reflected weakness at the noninsurance businesses—a grab bag of about two dozen companies.

Markel, following the Berkshire model, took profits from its insurance operations and built a portfolio of unrelated businesses starting 20 years ago. The portfolio, which was known as Markel Ventures until last year, includes Lansing, a building-products distributor; Brahmin, a maker of high-end handbags; and Eagle, a Virginia home builder.

This portfolio produced about $850 million of operating profits before taxes in 2025 and could be worth close to $10 billion, or nearly half of Markel’s market value. The company does have $4 billion of debt.

In its recent letter to the Markel board, Jana lauded the “dramatic improvement in insurance operations” but argued that what the Markel calls its “unique flywheel” of insurance and Ventures hasn’t worked for shareholders. Jana wrote that “the current structure produces sub-peer shareholder returns, creates no unique value, and warrants a discounted multiple.”

In a statement, Jana noted that Markel stock has lagged its peers over the past decade. “While we have appreciated our dialogue with the Board and the steps it has taken to remediate performance in insurance, clearly more is needed,” the firm wrote.

Markel is largely a specialty insurer, taking on such risks as professional liability, marine, valuable coastal homes, and even classic cars. These areas are seeing some pricing pressure but not as much as property insurance, where Markel has less exposure than some peers.

Well-run specialty insurers like Berkley and RLI trade for 2.5 times book value, double Markel’s valuation. Jana calls the noninsurance businesses a “poison pill” that limits potential strategic interest in Markel that could include overseas insurers eager for a U.S. presence.

Gayner tells Barron’s that the board will evaluate the Jana letter, but he didn’t sound enthusiastic about it. “Our diversified and resilient business model and long-term orientation have served our shareholders well for a long period of time and will continue to do so.”

Investor and Berkshire board member Chris Davis, whose firm, Davis Advisors, has been a Markel investor since its IPO, doesn’t like the Jana breakup idea. He told CNBC that it’s “one of the stupidest suggestions in the past 20 years.”

The Jana presence is a warning to Berkshire that if it doesn’t perform over the next decade, it also could be targeted by activists after Warren Buffett’s death.

Markel lacks Berkshire-quality businesses, but it has an improving insurance story, a strong balance sheet, and a market value that is just 2% of Berkshire’s. Its smaller size gives it better growth prospects.

Pity the grid operator PJM Interconnection. For decades it worked quietly and in the background, matching electricity demand with supply. Meanwhile, customers enjoyed some of the lowest electricity prices in the United States.

No longer. Politicians, businesses, households, and power companies think it needs an overhaul. Even PJM is in agreement.

PJM released a white paper this week that said the region “has years, not decades” to make fundamental changes to the way it operates. “The current situation is not tenable,” PJM CEO David Mills wrote in a forward to the report.

Normally, this sort of wonky report would land on the desks of a few legislators and regulators. But PJM’s territory includes a large number of data centers, including the compute-dense region of Northern Virginia. What happens to PJM will send ripples throughout the tech world.

The 70-page report is an exercise in navel gazing. But despite the deep introspection, not everyone is convinced the organization is up to the task of overhauling itself. One utility, American Electric Power (AEP), is considering pulling out of PJM altogether.

“The current state of PJM’s performance and stakeholder approval process does not give me great confidence that these issues will be resolved anytime soon,” Bill Fehrman, AEP’s CEO, said in an earnings call Tuesday. “In fact, if something is not done now, I expect we could still be having these same conversations in 10 years. The PJM market worked very well when supply exceeded demand; we are now in a very different time.”

Cloud computing and AI have begun to strain PJM’s existing generating capacity. Against the backdrop of surging demand, PJM paused applications in 2022 for new generating sources to connect to its grid, citing a years-long backlog. Just as the need for electricity was beginning to grow for the first time in decades, the grid operator prevented new sources from even applying to get hooked up.

PJM isn’t entirely to blame for the lengthy backlog. Many interconnection requests are duplicates — developers will propose essentially the same project in different grid regions to see which gets approved first. PJM’s sclerotic approval process meant that of the more than 300 gigawatts worth of projects in the queue in 2022, only 103 gigawatts ended up signing agreements, and only 23 gigawatts have been connected so far. Most developers withdrew rather than wait it out.

Demand in the region remains so large that, since PJM recently reopened the queue, power companies and project developers have filed more than 800 interconnection requests for 220 gigawatts worth of new power. PJM might have been able to pause new requests, but it did nothing to tamp down demand for new interconnections.

In its white paper, PJM has proposed three options. One would require utilities and power generators to essentially make bigger, longer-term commitments. (PJM currently requires them to commit to supplying a certain amount of electricity for three years.) The second option would change reliability guarantees for customers — those who pay less might get their power cut first. The last choice would try to move PJM closer to a real-time market, where supply and demand dictate prices, without entirely eliminating stability from long-term contracts.

It’s hard to see how PJM emerges looking good in any of these scenarios.

First, the way PJM operates its market has somewhat locked it into a three-year mindset. That seemed to work when natural gas power plants were replacing coal-fired generators, but today solar and batteries can be installed at least two to three times faster. What’s more, the shortage of natural gas turbines means that power plants planned today won’t be able to install the equipment until the early 2030s. Plus, prices of turbines have skyrocketed on the back of demand for hyperscalers. Given those realities, it’s hard to see suppliers wanting to commit to an even longer timeline.

The second option would result in PJM splitting its territory, its customers, or both into groups of “haves” and “have nots.” For people and businesses stretched thin by years of rising utility bills, it’s hard to see them being happy with downgraded service. Politicians have seized on rising power prices and anti-data center animus, and so they are unlikely to back this one.

The last approach has the most nuance, but it also sounds like PJM trying to be all things to all people. It’s the type of plan that seems like it should appeal to large utilities like American Electric Power, giving them the opportunity to play in short-term markets to make more profit while also benefiting from predictable long-term contracts — having their cake and eating it, too. Yet if AEP, one of the largest utilities in PJM territory, isn’t thrilled with the menu before it, it’s hard to see how PJM can pick that one either.

Rising demand for data centers has just happened to coincide with disruption from renewables and batteries, which continue to drop in cost. Those trends are now colliding with an organization that doesn’t want — or doesn’t know how — to change the way it operates.

PJM may have thought its white paper mea culpa would buy it some time. But with politicians threatening price caps and utilities balking at future participation, the grid operator may not have years to sort things out. It’s looking like a messy few years ahead.

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