Stock Analysis & Ideas

General Motors Stock: Great Value with an American Icon

Story Highlights

General Motors is among the leaders of the electric vehicle revolution with surprisingly affordable EV offerings. At the same time, GM stock is bargain-priced and value-seeking investors can hit the ground running.

Detroit-headquartered General Motors (GM) manufactures cars and trucks under the brand names Buick, Cadillac, Chevrolet, GMC, and others. I am bullish on the stock.

To find bargains in the stock market, you don’t always have to look for obscure companies. Sometimes, the best-known names offer terrific value, and General Motors stock is trading at an irresistible price right now.

Of course, price shouldn’t be the only consideration for informed investors. Quality is the most important thing, and General Motors is a premier business that’s leading the movement among automakers toward a more sustainable future for the planet.

Additionally, General Motors is a trailblazer in building smarter, more technology-enhanced vehicles. All in all, you’ll find that the bull case for General Motors stock is so powerful that investors can start building a long position right now with confidence.

On TipRanks, GM scores a 9 out of 10 on the Smart Score spectrum. This indicates a high potential for the stock to outperform the broader market.

A Limitless Opportunity

As General Motors stock hit the stubborn $65 resistance level several times last year, the company’s investors probably didn’t expect a major pullback to occur. Yet, inflation and supply chain issues have made it more difficult for automakers to turn a profit in 2022.

Watching the General Motors share price pull back to the $30s has been a frightening experience for some investors, no doubt. Yet, you don’t have to let fear be your guide. There’s a great value here as General Motors’ trailing 12-month P/E ratio is ultra-low at 6.26. This number implies that the share price is quite reasonable compared to the company’s earnings.

Moreover, General Motors is still able to generate strong revenue despite the macro-level challenges. As evidence of this, General Motors increased its revenue from $32.5 billion in Q1 2021 to $36 billion in 2022’s first quarter.

The company isn’t just sitting back and collecting revenue, though. General Motors continues to push the boundaries in building cars that are smarter and more technologically advanced. In this vein, the company recently teamed up with open-source solution provider Red Hat to develop software-defined vehicles.

Together, the two companies will build a technology ecosystem around the Red Hat In-Vehicle Operating System, which will deploy Linux’s operating system in conjunction with General Motors’ Ultifi software platform.

Scott Miller, General Motors vice president, Software-Defined Vehicle and Operating System, boldly declared that General Motors is “now a platform company.” In another audacious statement, Miller suggested that with Red Hat’s help, General Motors “aims to provide the most developer-friendly software platform in the industry.” Looking ahead, Miller posited that “With Red Hat’s operating system as a core enabler of Ultifi’s capabilities, the opportunity for innovation becomes limitless.”

Transforming the Brand

Maybe you’ve never thought of General Motors as an automotive tech platform company, but the times are changing and today’s automakers sometimes have to branch out in order to remain competitive. By collaborating with Red Hat, General Motors is proving that an old car and truck company can stay current and even push the envelope when it comes to modern technology.

Along with a move toward smarter, more advanced automotive platforms, there’s another shift happening in the 2020s in the market. Specifically, many automakers are working to design and commercialize vehicles that are friendlier to the planet than traditional internal combustion engine vehicles.

Is General Motors allowing itself to get left behind in the electric vehicle (EV) revolution? Absolutely not. In fact, the company has committed to an all-electric automotive portfolio by the end of this decade. Not only that, but Buick is preparing to bring its first EV to the North American market in 2024.

The Buick EVs will carry the brand name Electra, and Buick itself will feature a new logo. Duncan Aldred, global vice president, Buick and GMC, explained, “Buick’s new logo, use of the Electra naming series and a new design look for our future products will transform the brand.”

In other notable EV news, General Motors just revealed price cuts for the 2023 Bolt. The 1LT is now priced at $26,595, while the 2LT model now costs $29,795. Reportedly, these represent a $5,900 year-over-year price cut per vehicle.

General Motors Product Specialist Shad Balch assured that no features have been removed from these vehicle models despite the price cuts. “As we’ve said, affordability has always been a priority for these vehicles,” Balch stated.

Wall Street’s Take

According to TipRanks’ analyst rating consensus, GM is a Strong Buy, based on 13 Buy, two Hold, and one Sell ratings. The average General Motors price target is $59.53, implying 57.36% upside potential.

The Takeaway

Sure, it’s an old company, but there’s no denying that General Motors is a serious competitor in the EV market. As we’ve discovered, General Motors is working to make EVs more affordable and is even moving toward an all-electric portfolio.

Furthermore, General Motors stock is currently trading at a low valuation. Investors should seriously consider owning some General Motors shares as the company will remain a leader in providing the world with smarter, cleaner vehicles in the 2020s.

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