- Sales at Ford (NYSE:F) and GM (NYSE:GM) are booming, but you wouldn't know it from their share prices, Barron's says in a bullish cover piece this weekend.
- Key concerns include a drop from Q1's torrid sales pace (both slid when March sales came in at a mere 16.56M (annualized)); weaker China growth; rising buyer incentives; and subprime loans.
- But investors fail to appreciate the degree to which the two have achieved efficiencies since the last cycle. "That means it can sustain profitability - and show good profitability - late in the sales cycle," Annie Rosen, manager of the Fidelity Select Automotive Portfolio, says.
- Ford trades for 6.6x 2016 earnings and 3.9x projected cash flow; GM fetches 5.6x and 3.4x.
- Barron's thinks shares have 25% upside in the coming year, not including dividends of 4.9% for GM and 4.6% for Ford.
- Now read Are Hydrogen Cars A Threat To The Electric Vehicle? »