General Motors' 2014 Global Sales Were Great, But Europe Remains The Achilles' Heel
- The company announced increased capital spending, which should increase efficiencies and hopefully lead to more sales.
- The company increased global sales in 2014 by 2%, with China and Buick leading the way.
- Europe continues to be the thorn in the tiger's paw, having new car registrations decrease by 5.4% from the prior year.
- Google teased a car tie-up this week, and GM acknowledged it's talking.
- GM margins are heading up, while Google's seem headed down.
- Without a strategic buyer for self-driving product, this "alliance" is going nowhere.
- Right now, for new money, GM is the better investment.
- The stock has had a huge run of almost 20% just within the past month, that is the reason I have turned cautious.
- The American consumer will continue to propel the stock higher but may start looking at the lower margin vehicles thanks to no wage growth.
- The European consumer continues to struggle with purchasing vehicles as their economy is in shambles, especially the Russian economy.
- GM’s 200-mile electric car for $30,000 will be unveiled Monday morning in Detroit.
- I list the 12 things you need to know about it, mostly in terms of my predictions.
- What most people really want to know is the impact to Tesla. In brief, it is brutal. This is margin compression 101.
- Furthermore, if GM can deliver a 200-mile range EV for $30,000, Audi and others could do the same as well.
- Audi, not wanting to compete with GM for a $30,000 EV, could launch a 300-mile range EV for $45,000, based on this logic.
General Motors Is Trading At A Low Valuation With Positive Operational And Macro Tailwinds
- GM showed strong operational performance in core US and China markets in December.
- Macro factors, such as low pump prices and expansion of subprime credit, are positive tailwinds.
- Expect GM to take two steps forward and one step back during the first half of 2015.
- Mary Barra of GM saw sales grow 5% last year despite 30 million recalls.
- She is expecting a gain of just 2% despite a revamped line and improved economic outlook.
- Look for the stock to recover the ground lost last year.
- GM announced its retail results for December.
- The company's revenues continued to grow above expectations both in sales volume and average sale price.
- GM should continue to benefit from low gas prices and low-interest environment.
- Investors have very little faith in this company, so even a small improvement in performance will be noticed.
- The stock has been resilient during the past year amid strong headwinds at the company.
- American consumers are purchasing more vehicles and are purchasing those vehicles at a higher price point.
- The claims deadline is fast approaching at the end of the month for individuals who have been affected by the ignition switch issue.
General Motors: Deeply Undervalued With Large Upside Potential
- GM has declined over 20% in the past year due to recall and global economic concerns.
- The company trades at incredibly low forward valuations and is thus immensely undervalued.
- Major institutional investors and many analysts are extremely bullish on the future of the company.
- Several potential catalysts and many positive factors exist to propel the stock upwards.
- 2015 earnings estimates have decreased by three cents or 0.7% from about a month ago.
- The dividend yield is pretty good and is well supported by past earnings.
- A storm is brewing for next summer with respect to negotiating contracts for the UAW labor force.
U.S., China And Lower Crude Prices Will Fuel General Motors' Growth
- General Motors’ shares have under-performed, partly due to the impact of defective ignition switches.
- General Motors continues to struggle in Europe, even as others witness higher registrations.
- However, General Motors could rise in the coming years. Here's why.
- Falling gas prices should bode well for the company as consumers look to buy more fuel efficient vehicles.
- The company recently recalled an additional 316,000 vehicles for faulty headlamps.
- I will maintain a steady pace of purchasing as long as the stock is under $35.
- GM shares have suffered this year as investors worried about the implications of its recall woes.
- However, November sales were strong, and it is clear that consumers have not soured on the brand.
- Trading at 5x 2015 earnings ex-cash, GM is a compelling investment and should be bought.
General Motors' Profitability Is Dependent On A Highly Competitive Premium Car Market
- Sales began declining by the end of last year and through this year, resulting in the 10-month report for 2014 showing Cadillac sales down by 9.5% in the US.
- Vehicle recalls continue to haunt GM as the total number of outstanding recalls stand at 833,633 vehicles as of 20th November.
- Arizona’s attorney general announced that they had filed a $3.5 billion lawsuit against GM, claiming the company defrauded the state’s consumers by delaying recalls by up to a decade.
- With their most profitable segment taking a hit this year along with the hefty recalls, it seems like the company's net income will fall this year as well.
- With more lawsuits possibly being filed, and with long term prospects being uncertain, GM stocks might not be the best investment option at the moment.
General Motors: A Clear Winner Off Lower Gas Prices
- Recent monthly sales numbers blew away estimates.
- SUV sales gained traction in Q3 2014.
- Low gasoline prices could be a huge tailwind for 2015.
- It is time to review the Chevrolet Volt 1.0 after almost four years and over 40,000 miles driven.
- The all-new Volt 2.0 is just around the corner, with production starting next summer.
- The all-new Volt 2.0 should see dramatic cost reduction, with more parts common to other GM products such as the Cruze.
- GM lost money on Volt 1.0, but is only bringing the Volt 2.0 to market with profitability in mind.
- For GM’s shareholders, this will spell relief from having red ink subsidize mostly wealthier people in California's richest coastal ZIP codes.
- General Motors has had a rough year as the company has been pummeled by a huge recall crisis and losses in its European Operations.
- The shares have underperformed the overall S&P 500 by about 25% this year as a result.
- However, brighter days look ahead in the coming year. Investors should scoop up these cheap shares prior to the New Year as they are likely to outperform market in 2015.
High-Yielding General Motors Continues To Be A Deeply Discounted Stock
- The stock continues to be undervalued with respect to 2015 earnings estimates.
- The dividend payout ratio has decreased due to increased earnings.
- The company managed to increase its return on assets and equity from the prior quarter.
- In the following I will try to figure out what assumptions have to be met, to justify GM's stock price.
- The framework is a very simple DCF framework.
- Rather than pin an exact value on the company, my approach is to find reasonable ranges, for different outcomes.
- I find GM to be undervalued in all realistic scenarios.
Sat, Jan. 24, 8:25 AM
- In a low-yield world, the newly launched iBillionaire High Dividend Index - which tracks the trading moves of 25 investing-savvy billionaire investors such as Stanley Druckenmiller, James Dinan and Nelson Peltz - actually lives up to its name with a dividend yield of 5.34%.
- At 24%, the index has a high allocation of energy shares, including OXY, TRP, CNP, COP, BP, ATLS, CVI, WMB, APL, RIG and ARP.
- Also worth noting is that the index contains some high-yielding mortgage REITs, an area most investors hate right now but where billionaires seem to find value; examples are NRF, AGNC and CIM.
- No mutual fund or ETF tracks this index, but it offers a fishing pond of income investment ideas to research further.
- The top 20 holdings: TLM, CVC, GM, TIME, AEE, D, STAY, KMI, TROX, EXC, STNG, PPL, IRM, PFE, KKR, KAR, F, MIC, LO, ABBV.
Thu, Jan. 22, 7:08 AM
- General Motors (NYSE:GM) plans to offer the all-electric Chevrolet Spark in Maryland by the end of June.
- The model is currently only available in the U.S. in California and Oregon.
- The driving range on the hatchback is about 119 miles per charge.
- The Spark will cost $17,845 in MD after federal and state tax credits are factored in.
- Previously: An electric Bolt from GM (Jan. 10 2015)
Wed, Jan. 21, 4:46 PM
Wed, Jan. 21, 1:00 PM
- Dish Networks (DISH -0.2%) won a significant court battle in L.A. against Fox Broadcasting over the company's Dish Anywhere app.
- The ruling from a federal judge applied some of the principles from the Supreme Court's look at the Aereo case.
- The opinion from the court indicated that watching content on mobile devices and tablets through Dish Anywhere doesn't qualify as a breach of copyright law.
- The use of Dish's PrimeTime Anytime and AutoHop features were also deemed as fair use.
- Many programmers seemed to have anticipated the legal decision and already negotiated with Dish to disable ad-skipping for a period of time after a show airs.
- The ruling is sure to have been noticed on Madison Avenue where the largest (and smarter?) ad spenders continue to increase digital spending over broadcast/cable TV buys.
- Big advertisers: MCD, PG, BUD, WMT, TGT, K, GIS, TM, GM.
- Programmers: CBS, TWX, FOXA, SNI, AMCX, VIA , VIAB, DISCA.
Tue, Jan. 20, 9:58 AM
- General Motors (GM -0.9%) has now received a total of 2,818 compensation claims related to the ignition-switch recall after receiving another 108 over the last week.
- The automaker's compensation program has approved 49 death claims, 7 severe injury claims, and 65 injury claims to date.
- GM report (.pdf)
Fri, Jan. 16, 7:22 AM
- Opel (NYSE:GM) car registrations -5.4% to 68,565 units in December, according to the European Automobile Manufacturers Association.
- YTD registrations -4.6% to 924,275 units.
- Market share: 6.9% in December, 7.1% for the year.
- Results include the Opel, Vauxhall, Chevrolet, and other GM brands.
- EAMA release (.pdf)
Thu, Jan. 15, 8:08 AM
- "It’s time to introduce a hydrogen era," said Prime Minister Shinzo Abe in Tokyo as he announced a government initiative to build out a self-service hydrogen network of stations.
- The development comes only two days after Tesla Motors (NASDAQ:TSLA) CEO Elon Musk called hydrogen a "dumb" energy storage system.
- Toyota (NYSE:TM) is the pioneer in the FCV field and is building 1.5K Mirai vehicles for the Japanese government. Though taking a cautious approach to rolling out production, the world's top-selling automaker isn't ruling out selling hydrogen cars in all markets eventually.
- Review: Car and Driver's deep dive into the Toyota Mirai FCV.
- Related: Toyota opens up 5680 patents on fuel-cell technology to other automakers.
- What to watch: Abe has endorsed larger fuel-cell subsidies than those offered for electric vehicles in China, Europe, and the U.S. Will more governments take a side in the hydrogen vs electric battle setting up in the automobile industry?
- Related stocks: F, GM, OTCPK:NSANY, OTCPK:BAMXY, OTCPK:DDAIF, KNDI, HMC, OTCPK:MZDAY, OTCPK:SZKMY, OTCPK:FUJHY, OTCPK:MMTOF
Thu, Jan. 15, 7:50 AM
- General Motors (NYSE:GM) reports global sales rose 2% to 9.924M vehicles in 2014.
- 2014 sales by nation: China +12.0% to 3.539M; U.S +5.3% to 2.935M; Brazil -10.9% to 578.9K; U.K. +1.2% to 304K; Canada +6.3% to 249.8K.
- 2014 sales by brand: Chevrolet -4.1% to 4.787M; Opel/Vauxhall +3.0% to 1.095M; Buick +13.3% to 1.17M; Cadillac +5.2% to 263.8K; Others +9.4% to 2.608M.
- GM sales chart (.pdf)
- GM +0.3% premarket.
Wed, Jan. 14, 9:08 AM
- General Motors (NYSE:GM) reiterates it's on track to meet 2016 financial targets, including profitability in Europe.
- Higher EBIT-adjusted margins are expected in 2015.
- Spending on upgrading tooling, equipment, and other tech initiatives will increase to $9B from $7.5B this year.
- Naturally, recall costs will be high once again.
- CEO Mary Barra and other GM execs are attending the Detroit Auto Show and Deutsche Bank 2015 Global Auto Conference, also in the Motor City.
- GM -2.7% premarket.
Tue, Jan. 13, 3:01 AM
- Just a day after unveiling its Chevrolet Bolt, GM (NYSE:GM) announced it would be open to working with Google (NASDAQ:GOOG) on developing self-driving car technology.
- "I'm not in charge of deciding what we will and won't do, but I'd say we'd certainly be open to having a discussion with them," said General Motors CTO Jon Lauckner at the Detroit auto show. "I'd be completely surprised if Google doesn't have something to offer."
Mon, Jan. 12, 11:33 AM
- General Motors (GM +0.4%) plans to use its GM Financial lending unit as the exclusive provider of subsidized leases as of Feb. 3 - which could maybe boost GM earnings, but comes at the expense of Ally Financial (ALLY -3.9%) and U.S. Bancorp (USB -0.7%) unit U.S. Bank, which will be largely pushed out of the lucrative business.
- Ally Financial bull Mark Palmer of BTIG says the move shouldn't be wholly unexpected as Ally CEO Michael Carpenter last month warned this could occur. While it's a negative for Ally, says Palmer, a boost in non-GM used car loans should compensate.
Mon, Jan. 12, 10:23 AM
- General Motors (GM -0.1%) calls the new Bolt concept a "game-changing" model in the EV segment.
- "Chevrolet believes electrification is a pillar of future transportation and needs to be affordable for a wider segment of customers," proclaims GM.
- The automaker plans to offer the model in all 50 states and in many global markets. That statement could indicate GM plans to partner with an existing retail chain in an ambitious charging station build-out initiative.
- A starting price of $30K for the Chevrolet Bolt is expected.
- The details on performance, style, tech features, and crossover aesthetics are quite impressive - although it's relevant to note that GM use the word "concept" 22 times in its press release.
- There's a vigorous debate on this 434-comment stream on the impact for Tesla Motors (TSLA -3.3%) and other EV manufacturers (TM, OTCPK:NSANY, OTCPK:BAMXY) from the Bolt development.
Sat, Jan. 10, 9:20 AM
- General Motors (NYSE:GM) plans to introduce a new all-electric model with a driving range of close to 200 miles.
- The automaker will unveil a concept version of the Chevrolet Bolt at the Detroit Auto Show next week.
- The Bolt will be priced in a range of $30K to $35K, below that of several other EV entries including the anticipated selling price of the Model 3 from Tesla Motors (NASDAQ:TSLA).
- A more advanced battery from LG Chem is promised than the one used in Chevrolet Volts.
- 2014 GM EV sales: Chevrolet Volt 18.8K, Cadillac ELR 1.31K (full EV report)
- Related stocks: OTCPK:BAMXY, OTCPK:NSANY, TM.
Thu, Jan. 8, 12:26 PM
- General Motors (GM +1%) CEO May Barra says the company expects U.S. auto sales to hit 16.5M-17.0M (0%-2.9% growth) in 2015 on steady demand.
- The exec highlighted GM's Chevrolet brand as well-positioned to take market share with its refreshed model portfolio.
- GM's projection is in-line with estimates from within the industry.
- Previously: 2015 automobile industry forecast from TrueCar (Dec. 22 2014)
Thu, Jan. 8, 9:40 AM
- Buick set a record in 2014 by increasing sales globally 13.4% to 1.17M.
- Sales in China were up 13.5% to 919K, while the brand saw a 11.4% rise in the U.S. to 228.9K.
- Growth was also seen in the smaller markets of Mexico and Canada.
- What to watch: General Motors (GM +0.6%) has introduced several China-only models which have been well-received in the region. 2015 Buick sales could easily top 1M in the region.
Wed, Jan. 7, 8:02 PM
- Sales of electric vehicles in the U.S. rose 23% to 119.7K in 2014, according to a summary from InsideEVs.com.
- December was the peak month of the year with EV sales of 12,784 units.
- 2014 EV sales by model (estimated): Nissan Leaf 30.2K, Chevrolet Volt 18.8K, Tesla Model S 17.3K, Toyota Prius 13.2K, Ford Fusion Energi 11.55K, Ford C-Max Energi 8.4K, BMW i3 6.09K, Smart ED 2.59K, Ford Focus Electric 1.96K, Fiat 500e 1.79K, Cadillac ELR 1.31K, Toyota RAV4 1.18K.
- Plug-in entries from Porsche, Honda, Kia, Volkswagen, and Mitsubishi all recorded sales of less than a thousand for the year.
- Related stocks: OTCPK:NSANY, GM, TSLA, TM, F, OTCPK:BAMXY, OTCPK:DDAIF, FCAU, OTC:HYMLF, OTCQX:VLKAY.
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