GM Upgrade Only Underlines the Car Trade

Includes: F, FCAU, GM, TM, TTM
by: Emerging Money

By Tim Seymour

Comments from Deutsche Bank Wednesday indicated that U.S. car makers could pick up significant global market share from Japan’s quake-damaged auto industry.

While it is nice for GM and Ford (NYSE:F) that Wall Street thinks they have a shot at adding 2% to 3% to their piece of the auto market, the real story here is that the analysts are still bullish on the long-term future of this sector.

For instance, Deutsche thinks any dip in U.S. car sales this year will only balance out with stronger sales in 2012.

Stay long the global auto group and avoid all the vapid noise coming from people who do not do any work on valuations.

GM, Fiat (FIATY.PK), Tata (NYSE:TTM) and even Toyota (NYSE:TM) are cheap on a valuation basis and already have plenty of disruption from Japan priced in.

And as for GM itself, the 2-brain-cell call is that if gas prices climb back over $4, people will buy cars and not trucks — but they will keep buying. GM can easily make its money on cars instead of trucks.