As spring winds its way down and investors prepare their summer shopping lists, it’s the perfect time to look at General Motors (NYSE:GM) stock. Some people might be concerned about soft electric vehicle (EV) demand, and that’s understandable. Yet, General Motors’ latest round of data points should put your mind at ease. After reviewing the relevant facts, I am definitely bullish on GM stock.
General Motors is an iconic U.S. automaker, and a few critics might pigeonhole the company as an old “legacy” business. However, General Motors offers a wide variety of powerful EVs as well as internal combustion engine (ICE) vehicles.
To a certain extent, General Motors is still recovering from autoworker strikes and dealing with weak EV demand. On the other hand, the numbers don’t lie. At the end of the day, you may actually be convinced that General Motors stock is the best buy-and-hold asset you can have in 2024.
General Motors’ Warning about EV Adoption
Here’s a statement that’s bound to garner attention and publicity in the financial media. General Motors Chief Financial Officer (CFO) Paul Jacobson acknowledged, “EV adoption is going to be choppy. We’ve certainly seen slowing in the growth rates.”
Investors shouldn’t just disregard Jacobson’s statement. At the same time, there’s no need to dump your EV stocks, and I would consider GM stock to be an EV stock, more or less. Reportedly, there’s decent demand for the Cadillac Lyriq; furthermore, General Motors expects to introduce a 440-mile-range Silverado EV truck and a $34,995 Chevrolet EV Equinox in the coming months.
Besides, Jacobson isn’t trying to imply that General Motors isn’t selling EVs. In fact, he noted that General Motors’ retail EV sales grew 21% in 2024’s first quarter. Additionally, Jacobson confidently declared, “Retail performance for our EVs is actually holding in there pretty well. Now, we’re scaling up production.”
On the related topic of driverless vehicles, you may be aware that General Motors’ autonomous vehicle division, Cruise, suspended its driverless operations for a while due to safety concerns. The Cruise division is now back in business, though.
Thus, the Cruise pause shouldn’t lead you to believe that General Motors is giving up on autonomous vehicles. To quote Jacobson on this matter, “Just because we’ve paused vehicles on the road doesn’t mean we’ve paused investment in the technology.”
General Motors Deserves Praise for Its Beat-and-Raise
For a few weeks, it looked like GM stock might break its year-to-date 2024 uptrend. However, today’s share-price jump confirmed that the uptrend is still intact. The positive catalyst is easy to identify – it’s General Motors’ first-quarter 2024 earnings beat and guidance raise.
Jacobson already mentioned General Motors’ impressive EV-segment performance during the first quarter. Truly, it was an across-the-board success for General Motors. First of all, the company grew its revenue by 7.6% year-over-year to $43.014 billion, thereby beating the consensus estimate of $42.09 billion.
Turning to the bottom-line results, Wall Street expected the automaker to have earned $2.12 per share. However, the actual result was Q1-2024 earnings of $2.62 per share, up 18.6% year-over-year.
Jacobson credits car buyers for General Motors’ strong quarter. He asserted, “Our consumer has been remarkably resilient in this period of higher interest rates.”
In contrast, Tim Piechowski, portfolio manager at ACR Alpine Capital Research, emphasized General Motors’ ability to sell large vehicles. “The engine of the company is truck and SUV at this point… They’re just generating substantial profit and free cash flow that will continue to fund the initiatives in EV,” Piechowski explained.
Looking toward the future, General Motors raised its full-year 2024 GAAP adjusted earnings guidance from a range of $8.50-$9.50 per share to a new range of $9-$10 per share. Moreover, just to add an extra little incentive for investors, General Motors approved a second-quarter 2024 dividend of $0.12 per share.
Is General Motors Stock a Buy, According to Analysts?
On TipRanks, GM comes in as a Moderate Buy based on 12 Buys, six Holds, and one Sell rating assigned by analysts in the past three months. The average General Motors stock price target is $51.17, implying 12.4% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell GM stock, the most profitable analyst covering the stock (on a one-year timeframe) is Dan Levy of Barclays (NYSE:BCS), with an average return of 25% per rating and a 55% success rate. Click on the image below to learn more.
Conclusion: Should You Consider GM Stock?
By now, you should be thinking of General Motors as an ICE-vehicle seller but also as an EV company and even an autonomous-vehicle technology developer. To put it another way, General Motors may be a “legacy” automaker, but it’s also a thoroughly modern business.
Granted, it will be challenging for General Motors to succeed when EV sales are somewhat slow. Nevertheless, in light of the company’s quarterly stats, it’s evident that General Motors is ready to face that challenge. Therefore, I am considering GM stock as one of my top automotive sector picks of the year.
