What Makes General Motors (NYSE:GM) Stock So Attractive Right Now

- September 28, 2017

BNL Members received a notification that we recently added General Motors Company (NYSE:GM) to the BNL Portfolio. It is a company we have liked for quite some time due to its valuation and dividend. As seen in the chart below, the forward P/E ratio of Ford Motor Company (NYSE:F) and General Motors stock are by far the cheapest among other top manufacturing companies. In fact, GM stock’s 6.5x forward earnings multiple makes it the cheapest of any big company in the market, which implies safety and minimum downside. Its dividend of 3.75% is just icing on the cake.

Source: HADE Platform – Use it FREE!

However, a cheap multiple and large dividend are not the two reasons we decided that now is a good time to buy GM stock. After all, General Motors stock has been cheap for years, and has paid a respectable dividend since 2014. Instead, the big reason is in fact that GM stock is finally on the move.

It has surged 14% in the last month and is trading at levels it has not seen since late 2013. Meanwhile, Ford Motor Company still looks stuck in the middle of its 52-week range.

Source: HADE Platform – Use it FREE!

With that said, there is no major catalyst I can find that makes GM stock especially appealing. In 2016 North America units fell slightly year-over-year, and machine learning algorithms from Hade Platform predict this year shipments will fall again. While shipments may rise in 2018, it won’t be by much. As a result, there isn’t much to get excited about as it pertains to the broader business of General Motors.

Fortunately, because of its valuation, GM does not need an operational catalyst. GM stock could double and still be cheap, and it does not take an expert to see that. Therefore, with GM stock finally showing positive momentum, and being one of very few companies of significant value in a stretched market, I would not be shocked to see continued gains and a larger uptrend higher. In retrospect, that’s why we added GM stock to the BNL Portfolio.

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