General Motors Company (GM) — The world’s second largest producer of cars and trucks emerged from bankruptcy in 2009, and went public again 16 months later in November 2010. The U.S. Treasury completed the sale of all of its shares of GM stock just over a year ago, enabling the company to increase dividends and begin share repurchase programs.
Last week, S&P Capital IQ reiterated its “strong buy” rating on GM stock. Its analysts estimate 16.4 million light vehicles were sold in 2014, and they raised their sales forecast for 2015 to 16.8 million units from a previous 16.6 million units.
Lower gasoline prices should help boost overall automobile sales, but in particular, they should make customers more comfortable buying higher-priced SUVs, pickup trucks and crossovers. Increased U.S. sales are expected to offset weakness in some international markets.
Capital IQ estimates operating earnings will increase just 6% in 2014 to $2.52 per share, but then jump 69% in 2015 to $4.26 per share.
On Tuesday, GM stock broke from the bearish resistance line of a channel-down on high volume with MACD firmly in the bullish zone. By first establishing a higher low before Monday’s higher high, it has set a new uptrend in place.
Buy GM stock at the market for a trade to $41 or as a long-term, cornerstone investment. This chart strongly indicates GM has finally turned the corner and is again capable of providing investors with a solid return, estimated at 17% from current levels, plus a dividend yield of 3.5%.
