In the list of "fallen angels" below, we focus on buy-rated stocks that fell sharply in the second q...
General Motors: The Road Ahead
05/23/2016 8:00 am EST
Our latest featured stock has been an iconic American company for more than 100 years; in our view, the time has come to “buy American” again, suggests Jay Taylor in Top Stock Insights.
After emerging from bankruptcy, a reborn General Motors (GM) launched its IPO in November 2010 at around $33 per share. Today, nearly six years later, the stock trades around the same level.
But there are good reasons to think that now is a great time to be buying shares of General Motors.
We’ll start by taking a look at the stock’s valuation. GM stock trades at a price-to-earnings ratio of just 4.7 compared to the S&P 500’s P/E ratio of 23.8. Meanwhile, its 4.9% annual dividend yield is the most attractive of the auto group.
General Motors CEO Mary Barra took the helm in January 2014 and was immediately confronted with the company’s major ignition switch scandal and subsequent recall.
An employee of GM since the 1980s, Barra faced the challenge and scrutiny of being the first women to run one of the "Big Three" American automakers.
What’s more, she faced the challenge of guiding the new General Motors through its first major scandal.
Barra has embarked on a path of transparency, one that we think will serve the company well as it seeks to put the past behind it and regain consumer trust.
Mary Barra isn’t just focused on the past. In fact, more so than many other car companies, Barra is looking to the future.
General Motors has been leading the American automakers into the future, both through partnerships with other companies and through experimentation with alternative fuels.
The Chevy Volt is a well-built gasoline-electric plug-in hybrid. General Motors is also now releasing a pure plug-in electric vehicle, the Chevy Bolt.
General Motors also invested $500 million in Lyft, the ride-sharing company; the firm also started a car-sharing service and acquired Cruise Automation – an autonomous car technology company.
Finally, sales trends are extremely strong right now. As the average age of cars on American roads hits all time highs, General Motors is thriving.
Nearly half of General Motors cars are now sold in China and the company is now third in terms of global car sales. Analysts forecast earnings per share growth of 14% over the next five years.
Today we’re adding General Motors stock to our model portfolio and are excited to see what’s on the road ahead for this company.
By Jay Taylor in Top Stock Insights
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