We recently published an article titled, 11 Stocks on Jim Cramer’s Radar Right Now. In this article, we are going to take a look at where General Motors Company (NYSE:GM) stands against other stocks on Jim Cramer’s radar right now.
In his recent episode of Mad Money, host Jim Cramer focused on the upcoming market events, emphasizing the importance of new consumer price index data alongside a series of reports as the earnings season kicks off.
Cramer pointed out that the Labor Department’s nonfarm payroll report revealed significant job growth in September, surpassing expectations. He highlighted the significant rally in stocks on Friday, a response to better-than-expected job creation figures. The U.S. economy added 254,000 jobs in September, significantly exceeding Wall Street’s estimate of 150,000. Additionally, there were upward revisions for the previous two months, with 72,000 more jobs reported for July and August combined.
Despite his initial expectation that stocks would decline as bond yields surged, Cramer noted the resilience in the market. He observed that people seemed to feel relief, thinking that a major economic downturn was not on the horizon, which prompted a flurry of buying activity in the stock market. He added, “Maybe we aren’t headed toward a landing at all.” He described the situation as quite unusual and, in his view, “quite exciting”.
He mentioned that on Wednesday, the Federal Open Market Committee will publish notes from its last month’s meeting, which could clarify the central bank’s bold choice to cut interest rates by 50 basis points. According to Cramer, Wall Street is rife with speculation about the Federal Reserve’s future actions, especially following strong labor statistics released last Friday. As speculation swirls around whether the next cut will be 25 or 50 basis points, Cramer leaned towards the belief that it would likely be 25 or nothing at all. He added:
“Then again, what really matters is the overall direction for rates, and that direction is most definitely lower, which is bullish for stocks.”
He also mentioned that Friday would bring the producer price index report, which, like the consumer price index, will serve as a critical indicator for the Fed’s upcoming decisions. Cramer commented:
“Here’s the bottom line: a market that appreciates good news, like a robust job creation number, is a market that can handle, well, let’s just say, the historically tough month of October. After today’s performance, all I can say is so far so good.”
Our Methodology
For this article, we compiled a list of 11 stocks that were mentioned by Jim Cramer during his episode of Mad Money on October 4. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Jim Cramer Says General Motors Company (NYSE:GM) Is ‘Having A Great Year’
General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 72
General Motors Company (NYSE:GM) is a leading global automotive manufacturer engaged in the design, construction, and sale of trucks, crossovers, cars, and automobile parts. In addition to its core vehicle offerings, the company provides software-enabled services and subscription options. Vehicles are marketed under several well-known brands, including Buick, Cadillac, Chevrolet, GMC, Baojun, and Wuling. The company distributes its products through a network of retail dealers and distributors, catering to both individual consumers and fleet customers.
Talking about several key points related to the stock, Cramer said:
“Hey, you know what tempting is? General Motors. They hold an analyst meeting [on] Tuesday. GM’s having a great year. [The] stock’s up 27%. I think the redoubtable CEO Mary Barra will tell a strong story.”
Recently, General Motors (NYSE:GM) released its third-quarter sales figures for the U.S. market, which highlighted a 3% increase in retail sales compared to the previous year, resulting in a total of 659,601 vehicles delivered.
The quarter also marked a significant achievement in electric vehicle sales, with 32,095 EVs sold, representing a remarkable 60% year-over-year growth and a 46% increase from the second quarter of 2024.
Cramer went on to say:
“The company’s been able to put up quality numbers even when interest rates were higher. So who knows how well it can do now that the Fed’s our friend. Holy cow. Hey, by the way, unlike Ford, GM has a substantial buyback, which has clearly helped in stock. By contrast, Ford stock’s down 13% for the year. Given that GM still trades at less than five times earnings, and as long as Barra doesn’t cut the forecast, I think the stock can only go higher.”
With the positive momentum observed in sales and management’s optimistic outlook for the remainder of the year, General Motors (NYSE:GM) raised its guidance for full-year 2024. The company forecasts adjusted EBIT in the range of $13 billion to $15 billion, adjusted diluted earnings per share between $9.50 and $10.50, and adjusted automotive free cash flow projected to be between $9.5 billion and $11.5 billion.
Management commented that the increase in cash flow guidance surpasses the growth in EBIT, which is largely because of aligning production with market demand and expected benefits from working capital management over the upcoming months.
Diamond Hill Capital stated the following regarding General Motors Company (NYSE:GM) in its Q2 2024 investor letter:
“Other top Q2 contributors included Extra Space Storage and General Motors Company (NYSE:GM). Shares of automobile manufacturer General Motors (GM) rose as its internal combustion engine business has also received a boost from the recent slowdown in electric vehicle adoption among consumers. GM also announced additional share repurchases in Q2, reinforcing its commitment to returning cash to shareholders.”
Overall, GM ranks 6th on our list of stocks on Jim Cramer’s radar right now. While we acknowledge the potential of GM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.