Keep an eye on General Motors (SYM: GM).
Over the last few weeks, the auto stock gapped from about $64 to $46.57 on tariff concerns. However, the drop appears to be a severe overreaction. Plus, as noted by Seeking Alpha, “shares of General Motors just trade at an unreasonably low forward earnings multiplier, implying a double-digit earnings yield of 25%, which in my opinion lowers risks for investors.”
GM insiders are also bullish, with director Alfred Kelly Jr. picking up 12,000 shares in late January for just over $607,920. He paid an average of $50.66 per share. Plus, analysts at Wells Fargo just raised their price target on GM to $37 a share with an underweight rating.
In late January, Deutsche Bank upgraded GM to a buy rating with a $60 price target. “While there are concerns about the cycle and potential policies of the new Trump administration, our view is that these risks are already very well-known and there’s room for positive surprises (e.g., pricing holds up better, no Mexico tariffs, etc.),” said the firm, as quoted by CNBC.
“GM has consistently executed well in the midst of macro uncertainties, and we think this will continue to position the company well for 2025, amid a lingering [electric vehicle] slowdown, tariff concerns and potential policy changes.”
Helping, the company declared a 12-cent dividend, which is payable on March 20 to shareholders of record as of March 7.
Also, recent earnings weren’t too shabby.
In its fourth quarter, the company’s EPS of $1.92 beat by eight cents. Revenue of $47.7 billion, up 11% year over year, beat by $4.13 billion.
In addition, as noted by CNBC:
GM’s 2025 guidance includes net income attributable to stockholders of $11.2 billion to $12.5 billion, or $11 to $12 in earnings per share; adjusted earnings before interest and taxes (EBIT) of $13.7 billion to $15.7 billion, or $11 to $12 adjusted EPS; and adjusted automotive free cash flow between $11 billion and $13 billion. “In our view, the guidance for 2025 leaves no room for errors, and also does not include impact from regulatory changes in the U.S., especially on tariffs and BEV support,” analysts at Bernstein added.
With a good deal of negativity priced into GM, weakness has become an opportunity.
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