It is still early in 2021, but so far it’s been a good year for General Motors.
Just like when they buy a new car, investors are sitting back and enjoying the ride of a stock that jumped to its sixth record of 2021 Thursday. It is the highest level for the automaker since November of 2010, according to tracking by the Dow Jones Market Data Group.
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“GM continues to diversify its business as it expands into electric and autonomous vehicles. It also benefits from high margins in North America, solid cash flow, and a strong balance sheet” wrote Bill Selesky of Argus.
The analyst also raised the stock to a buy last week and Selesky adds that investors are under-appreciating GM’s key areas such as its “strength in traditional internal combustion vehicles, as well as its Chinese JV, Ultium battery, and financial services businesses.” Deutsche Bank, on Wednesday, raised its price target to $64 a 14.5% rise from current levels.
CEO Mary Barra kicked off the month with a showstopping rollout at the virtual Consumer Electronics Show, now known as CES, which included a flying car and a new logo, but also key strategies around the automaker's electric vehicle and autonomous future.
She then followed up with a series of initiatives that kept investors buying. These initiatives have encouraged investors, driving the stock up 34% for the month besting the S&P 500’s 2.5% gain so far.
Earlier this week, GM announced a partnership with Microsoft in which the tech-giant will take a stake in the automaker’s self-driving Cruise company that values the operation around $30 billion, as reported by FOX Business. Earlier this month it announced the formation of BrightDrop, a new, more efficient and eco-friendly, delivery business in which FedEx Express will be the inaugural customer.
“BrightDrop offers a smarter way to deliver goods and services,” said Barra. “We are building on our significant expertise in electrification, mobility applications, telematics and fleet management, with a new one-stop-shop solution for commercial customers to move goods in a better, more sustainable way.”
Earlier this month it tapped about $800 million to convert its CAMI Assembly plant in Ontario, Canada into an electric vehicle manufacturing plant. The Chevrolet Equinox facility will begin making electric vans for the automaker's new BrightDrop unit by year-end.
Fourth-quarter retail sales were brisk as well, the best since 2007, with deliveries up 12%, the company noted adding that transaction prices set records at $41,886. The GMC Sierra had its best sales performance ever.
The improving stock price combined with progress on strategy may help the company bring back its $0.38 quarterly dividend which was suspended in April of 2020, as the coronavirus pandemic raged.
“We expect the company to soon reinstate its dividend, which it suspended early last year due to the pandemic” added Selesky.
Inquiries to GM on the dividend reinstatement were not returned.
FOX Business' Gary Gastelu contributed to this report.