Analysts consider GM shares a good buy despite current recall crisis

Article by Andrew Christian, on November 21, 2014

If you are an investor looking to invest in stocks right now, then General Motors could be a good buy for you. Likewise, GM may be the best buy in the auto industry, according to a consensus of analysts who are noted the carmaker’s highest-quality vehicles in decades and strong operating margins.

Despite very strong sales in the United States and expected record global sales in 2015, its shares are trading 7.7 times estimated earnings for the next four quarters, which means GM is around 23 percent less expensive than Toyota Motor Corp. and 55 percent discounted to the Standard & Poor’s 500 Index.

So far, the only thing weighing on GM’s stock is the fallout from its recall of millions of vehicles due to faulty ignition switch, which has also veiled the progress the carmaker has made since Mary Barra sa as chief executive in January.

Feinseth, chief investment officer at Tigress Financial Partners LLC, gave a strong-buy rating on GM saying that quality and appeal of its overall line “has never been better.” He noted that GM’s product lineup includes “some of the best quality, best looking, best performing, feature-rich” cars it has built.

Robert Royle of Smith & Williamson Investment Management LLP remarked that investor concerns over the recalls are the only reason why its stock is being “so unduly punished.” He said that on the longer term, GM has a good product cycle coming.

Compared to a number of global carmakers, GM has an enterprise value that is second lowest. Its market cap is likewise the lowest compared with trailing 12 month sales, according to data compiled by Bloomberg.

David Whiston, an analyst at Morningstar Inc., noted that some people has some bias against American carmakers, saying that they are conditioned to think that Toyota or a German brand in better than them.

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