Shares of old-time automaker General Motors (GM) have been stuck in a funk for such a long time.
There was hope that the long-time underperformer would make up for lost time when the stock broke out in the back half of 2020. While General Motors may have been a tad late to the EV race, it’s still very much in the running.
Despite this, the stock hasn’t been nearly as hot as some of the other EV stocks, most notably Ford (F) and Tesla (TSLA), which shined brightly over the past year.
As GM stock continues consolidating just shy of the $55 mark, investors may be looking to a breakout at some point down the road. With GM’s EV ambitions and a lot to look forward to as the EV market opens up to players beyond Tesla, GM definitely seems one of the more compelling catch-ups plays out there.
The firm may not have an electrifying F-150 Lightning in the cards for 2022. Still, GM does have potential catalysts that could act as a spark. With a below-average valuation and an underrated growth profile, I am bullish on GM stock.
General Motors: Serious About Going Electric
This isn’t the GM of old anymore. It has a new logo, a new vision, and is ready to shift gears to take advantage of an electrifying opportunity to capture the EV space. Traditional gas-powered vehicles may very well be on their way out, and GM wants to be on the right side of the multi-year trend.
Indeed, 2021 was a year full of COVID-induced disturbances. They were made apparent in the company’s latest quarter, which was weighed down by shortages, disruptions and higher production spending.
Like most other companies these days, GM has felt the pain from its disrupted supply chain and elevated inflation levels. Specifically, higher commodity prices and semi shortages have taken a bit of a step out of the auto behemoth’s stride.
With the page turned on a new year, though, GM is ready to move forward. As it does, it’s hard to be excited at the firm’s potential to reinvigorate its growth with its next generation of EVs.
Some EVs, including the Chevrolet Equinox and Blazer SUVs, poised to launch in 2023 could draw a considerable amount of hype leading up to their release.
General Motors: From Disrupted to Disruptor?
The MSRPs of such much-anticipated EVs are intriguingly low versus the competition. As such, it will be interesting to see how much success such affordable EVs will be met with at launch.
I think demand could overwhelm to the upside, as more EVs become available at better prices over time. Undoubtedly, the electrification of such popular GM SUV lines could entice Tesla to reduce prices on its flagship Model X, pressuring both sales and margins in the process.
With an exciting roadmap for the next few years, I think it’s time to look past GM stock’s turbulent 2021 to what could be a smoother 2022, even though January has been anything but smooth for the broader markets thus far.
Wall Street’s Take
According to TipRanks’ consensus analyst rating, GM stock comes in as a Strong Buy. Out of 15 analyst ratings, there are 12 Buy recommendations and three Hold recommendations.
The average General Motors price target is $75.57. Analyst price targets range from a low of $53 per share to a high of $100 per share.
Bottom Line on GM Stock
GM may not be the most exciting traditional automaker transitioning to go electric, but it’s definitely one of the cheapest.
While GM has lost some luster to rivals over the years, I do think it has a front-row seat to some incredible growth from the booming EV industry.
With shares trading at 0.7 times sales and 8.5 times trailing earnings, GM stock seems way too cheap at this juncture.
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