A veteran analyst explains why General Motors stock is a bargain buy

As battery electric vehicles and plug-in hybrids take the automotive spotlight, the auto industry is deep into a new chapter of technology and innovation reflected in the new cars in showrooms across the United States.

Although many eyes are on certain companies like Tesla (TSLA) Japanese car giant Toyota (TM) and promising electric vehicle startups like Rivian (Exactly) and Lucid (LCID) one of Detroit’s big three auto powerhouses is often left out of the conversation—General Motors (GM) .

In a recent article for TheStreet Pro, veteran analyst Brad Ginesin noted that GM stock has been “stuck in neutral” for years due to factors that included “peak earnings, competition and an economic downturn that will hurt profits.” , which have seen little benefit for shareholders betting on the automaker’s massive advances in electric and autonomous vehicles.

While Ginesin thinks GM stock is selling at a discount, he noted a few key factors that could help the automaker realize its true value.

Chevrolet Equinox EV at the Chicago Auto Show

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A dirty secret to market success

There’s one phrase that gets investors giddy and excited, while also drawing ire and criticism from figures like United Auto Workers President Shawn Fain: stock buybacks.

As much as it’s a dirty tactic by white collar producers, redemptions make all the difference when it comes to the number next to the symbol.

Ginesin noted that GM executives have taken a “more balanced approach,” directing more cash into share buybacks, which has had a positive impact on the company’s earnings.

“GM reported an excellent quarter at the end of July, with (earnings per share) up 60 percent,” Ginesin said. “Increased buybacks helped bolster EPS with shares outstanding down 17% from 1.37 billion to 1.12 billion over the past year.”

While Ginesin notes that buybacks are not among GM’s top priorities, he believes that if GM continues its business success and the stock price doesn’t reflect it, “the percentage of shares that it buys back every quarter may remain the highest of any company of the S&P 500.”

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An intense game plan for electric vehicles, but focused for consumers

A key distinction that sets GM apart from Detroit rivals like Stellantis (STLA) and Ford (F) is its relatively smoother launch of electric vehicles than its contemporaries.

Ford has radically changed its focus on EVs very recently. In a move that will cost the company billions, the Blue Oval is focusing more on hybrid models of its offerings, while its EV strategy focuses on smaller vehicles.

Meanwhile, Stellantis is aggressively scaling back its North American operations as dealers express doubts about the electric vehicles they will be tasked with selling to consumers.

Although GM has laid off more than 1,000 workers from its software and services branches, it’s still on the greener side of the turf when it comes to its product offering.

While Ginesin pointed out that “GM wasted large amounts of capital creating hype for their electric vehicles before they were available,” the effort is having an impact. The cars appeal to a wide range of buyers, with “54% of EV purchases” coming from first-time GM buyers, all while avoiding a Tesla-style inventory nightmare.

SAN FRANCISCO, CALIFORNIA – JUNE 08: Chevrolet Cruise autonomous vehicles

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Autonomous turn

GM-owned Robotaxi Cruise is “good news” for investors, according to Ginesin. He classifies it as “a monthly opportunity with little to no valuation,” a description that can easily be given to Tesla and its latest autonomous vehicle and artificial intelligence efforts, which are expected to be unveiled on October 10.

Compared to Cruise’s small role at GM, he says Tesla’s market cap and stock price are dictated by “a smell that (Tesla) might have robotaxi on the way in the next few years,” also noting that the automaker’s small robotaxi effort had outside support from companies like Walmart (WMT) and Honda (HMC) .

Related: Uber robotaxi push may be the next step in the sinister model

Recently, Cruise received another boost from a major partner. On August 22, ride-hailing giant Uber (UBER) announced what it calls a “multi-year strategic partnership” with Cruise to offer rides in its self-driving vehicles through ride-sharing app Uber.

In 2025, Uber users can ride one of Cruise’s self-driving Chevrolet Bolt vehicles for “qualification trips,” which may cast the widest net for the company’s potential customers.

“Cruise is on a mission to harness driverless technology to create safer streets and redefine urban life,” said Cruise CEO Marc Whitten. “We are excited to partner with Uber to bring the benefits of safe, reliable and autonomous driving to even more people. unlocking a new era of urban mobility.”

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