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GENERAL ELECTRIC CO. (New York symbol GE; www.ge.com) saw its shares drop from $42 in 2007 to under $6 in 2009, as the financial crisis caused big losses at its banking division. In response, the company decided to shrink this business’s assets to half of what they were before the recession. It expects to complete these cuts by the end of 2014.

Meanwhile, GE is expanding its industrial operations, mainly through acquisitions. That’s generally riskier than internal growth, but these businesses have unique technologies that offer competitive advantages. GE has also entered into a new alliance with France’s Alstom that will help it expand in developing nations.

GE is one of the world’s largest manufacturers. It makes machinery for power generation and distribution, such as turbines, as well as other products, like jet engines, medical equipment, appliances, lighting and locomotives.

The company also operates GE Capital, which mainly provides loans to GE’s clients. The company scaled back GE Capital after the division suffered big losses in the 2008/09 financial crisis. It now accounts for 30% of GE’s revenue and 37% of its earnings.

As part of these reductions, GE Capital will soon unload its North American consumer lending business as a separate firm called Synchrony Financial (New York symbol SYF). GE will sell 20% of Synchrony’s shares through an initial public offering. After that, the company will give its shareholders the chance to swap their GE stock for Synchrony shares.

This business provides credit card loans through retailers like Wal-Mart and J.C. Penney. It also loans money directly to consumers.

This is the latest in a string of non-industrial businesses the company has sold in the past few years. In 2013, it sold its remaining 49% stake in TV and movie producer NBC Universal for $16.7 billion.

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Investing in stocks: Deal with France’s Alstom opens up opportunities in fast-growing markets like China

GE is using the cash from its asset sales to expand in faster-growing areas, such as making oil and gas drilling gear. In the past seven years, it has spent $14 billion buying other companies, such as Texas-based Lufkin Industries in 2013.

As well, GE has just finalized a major new alliance with France’s Alstom SA, a leading maker of parts for power plants, like gas turbines, and electrical transmission equipment. The deal will give GE greater access to fast-growing markets like China, which uses many of Alstom’s products in its power plants.

Under the agreement, GE will form three 50/50 joint ventures with Alstom. One will combine the companies’ electrical grid operations, while a second will focus on products for renewable energy projects, like offshore wind farms. The third will hold Alstom’s nuclear power equipment division.

As part of the deal, the French government will buy 20% of Alstom, so it can keep control over some operations it considers to be of national importance, such as nuclear technology.

In addition, GE will sell its rail-signalling operations to Alstom for $825 million. That will strengthen Alstom’s transportation business, which makes France’s high-speed trains.

In all, GE will pay about $10 billion when the Alstom deal closes in 2015. The new operations should add about $0.07 a share to its annual earnings, starting in 2016. As well, the company expects combining plants and other operations to cut its annual costs by $1.2 billion by the end of the fifth year.

Meanwhile, GE continues to develop new products. It spent $4.75 billion (or 3.3% of its revenue) on research in 2013, up 5.1% from $4.5 billion (or 3.1% of revenue) in 2012.

GE’s strong balance sheet will support these investments. As of June 30, 2014, its industrial operations’ long-term debt was $16.6 billion, or just 6.5% of GE’s market cap. These businesses also held cash of $10.5 billion.

The company is also using its improving earnings to buy back shares. It spent $1.5 billion on repurchases in the first half of 2014 and still has $10.9 billion remaining under its current authorization, which expires in 2015.

The stock trades at 15 times the company’s likely 2014 earnings of $1.67 a share. It also trades at an attractive 13.9 times its forecast 2015 earnings of $1.81 a share.

GE’s improving earnings should give it more room to increase its $0.88 dividend, which yields 3.5%.

GE is a buy.

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