With shares of General Motors Company (NYSE:GM) trading at around $29.86, is GM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
Many people are making a critical mistake when it comes to General Motors. They’re allowing their personal anger toward the company get in the way of a potential investment. If your goal is to make money, then you need to let it go. General Motors is clearly in the middle of an impressive turnaround. For example, December 2012 saw the highest December sales in five years. There was a 5 percent increase in sales year-over-year with 245,733 units being delivered. Full-size pickups saw more sales than in any month since September 2008.
On a more specific basis for sales, the Chevrolet Volt was up 72 percent, the Chevrolet Cruze was up 27 percent, the GMC Sierra was up 13 percent, and the Chevrolet Silverado was up 6 percent. It’s also important to note that General Motors delivered more than one million vehicles that passed the 30-miles-per gallon test in 2012.
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Margins are healthy, operating cash flow is at $11.27 billion, and analysts love the stock. In addition to that, the Trailing P/E is 11.21, and the Forward P/E is 7.58. For some reason, the short position is relatively high at 6.70 percent. Those shorts are playing a dangerous game. It’s definitely possible that the stock will retreat, but there are much better short opportunities out there.
Let’s take a look at some important numbers for General Motors.