Competitive Rebound Of General Motors Shows Promise

Mar.18.13 | About: General Motors (GM)

The automobile company General Motors Co (GM) stands as an American power company among other automobile companies. GM makes some of the most recognizable cars, trucks, and automobile parts. Included in the North American collection are Buick, Cadillac, and Chevrolet. The cars that are produced by this company cannot be missed.

It is understandable that some might question if the investment in GM stock is a wise one. It is true that in 2008 the American government paid 4.9 billion to GM. The question then, is not is an investment in GM wise, but rather is an investment in GM profitable? To this I would say that although GM (and every other American automobile company excluding Ford) had to take a bailout a few years back, the company is now thriving. Ford on the other hand still has a large debt which is negatively affecting its stock. GM continues to make quality cars and people continue to buy those cars. Not only that but GM has made major advances in the way that they do business and run their manufacturing companies.

In 2010 GM offered the largest IPO in history by selling about $20 billion in common and preferred shares to the public. Clearly, this is an indication that the company is feeling secure about its future financial status. Since that time, GM stock has gradually increased its worth. CNN has reported that GM's auto sales have grown in the past few years between 10 and 12% in the United States. GM also has a strong demand in international regions as well (especially China). Because GM has branched out to other countries (GM Europe, GM International Operations, and GM South America), the stock has been steadily on the rise.

Looking locally on GM trading, an investor can clearly see that an investment in GM stock is an investment in America. Because GM is an American based company the investor is putting the money back into American commerce. Consider this. According to the detroit news, the federal government sold $489 million in GM stock in February and vows to sell all its stock by March of 2014. The sales from February total 17.2 million shares. That is a lot of shares by any standard. Being that the federal government sold these shares, the money has gone to reducing the bailout loan tremendously. Keep in mind that this debt is not GM but every automobile manufacturer in America excluding Ford. The fact that GM stock is doing so well is a great indicator that the company will not need such assistance again in the future. It is also a great statement of the company's ability to rebound. As the American economy has started to thrive again, one can see that GM has also stepped up to the plate and has thrived.

GM has done its part to bring about a great company value and great stock. From offering more shares to the public as well as increasing the company revenue GM has been in the forefront of productive American industry. In the past year GM's stock has ranged from 18.72 to 30.68 according to Etrade. The lowest being the 18.72. Ford has had quite a lower range of 8.82 to 14.30 with an average of 13.22. GM's stock has held substantially well by holding a 28.45 average. MSN money reports that in the last 6 months GM has increased 23.50%. The past 3 months have yielded an 11.50% increase. The past year of sales for GM was a little over 150 billion whereas the company's main competitor, Ford, did 134 billion. Everywhere one looks one sees the green plus sign of confidence on GM stock. If one looks at the buying recommendations of the analysts, one will see that GM is always listed as a strong buy. I would tend to agree with the masses on this conclusion. The numbers do not lie.

Thinking on one's investment needs, it is nearly impossible to picture a strong stock portfolio without automotive stock. With most Americans owning on average two to three cars per household, it would be unwise not to invest in this market. Furthermore, when looking at the diversity of the GM brand it would be a tremendous folly of the investor not to take serious consideration of this stock option. GM has great assets that make it a preferred stock. Profit numbers are on the increase, it is an American company with 213,000 employees, the supply and demand factor will always be present as long as people still require transportation, and the company is well established. If looking at the options available, it is clear that GM is doing far better than the competition stock. GM is and will continue to be a wise investment to hold.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.