We recently compiled a list of the 10 Best Car Stocks To Invest In Now. In this article, we are going to take a look at where General Motors Company (NYSE:GM) stands against the other car stocks.
The automotive industry has witnessed a constant churn of innovation over the last several decades, with car makers continuously providing drivers with new features. However, there has been a different pace of change lately, with the rapid adoption of electric vehicles (EVs) being the most talked-of topic in the industry.
READ ALSO: 10 Best Used Car Stocks To Buy According to Hedge Funds and 10 Best Self Driving Car Stocks To Buy Now.
A lot of the conversations in the automotive space currently revolve around robotaxis, the autonomous taxis for ride-hailing, especially after Elon Musk unveiled the Cybercab in October this year. His company is showcasing the self-driving two-seater at several key locations across the United States in December, with plans to deploy the autonomous services in California and Texas in 2025.
According to a report in Euro News, global EV sales surged in November, with a record-breaking 1.8 million units sold worldwide, overtaking the record set in the prior month by 100,000 units. China accounted for two-thirds of the sales during the month. Around 15.2 million EVs were sold between January and November, growing 25% year-to-date.
The report stated a 3% decline in EV sales in the region comprising the United Kingdom (UK), the European Free Trade Association (EFTA) and the European Union (EU). With 280,000 units sold in November, annual sales for the region reached 2.7 million units. However, the UK is having an improvement in the second half of the year; sales have grown 17% from last year, driven by the Zero Emission Vehicle (ZEV) Mandate.
China is not only leading the EV market but is also on track to take over the global auto industry because of its massive and growing capacity. Earlier this month, the Council on Foreign Relations (CFR) highlighted that the country’s EV capacity will soon match its domestic auto demand, whereas China’s car production capacity is already half of the global demand for automobiles.
It is projected to have a total output of 20 million electric vehicles in 2024, with production increasing between 4-5 million units annually, helped by heavy investments from Chinese firms to expand production. According to the New York Times, China also has the capacity to produce over 40 million internal combustion engine cars a year.
India’s auto market is also seeing impressive growth, contributing significantly to the global market. Annual production of automobiles in the country stood at 25.9 million units in fiscal 2023. The thriving vehicle market has also resulted in a booming auto components industry, which has grown 11.3% during the first half of FY25, driven by strong demand for larger and more powerful cars.
Methodology
We sifted through screeners to identify stocks in the auto manufacturers, auto parts, and auto dealerships industries. From there, we selected the 10 stocks with the highest number of hedge fund investors, based on Insider Monkey’s database of over 900 prominent hedge funds as of Q3 2024. The 10 best car stocks to invest in now have been ranked in ascending order based on the number of hedge funds holding stakes in them. Where two or more stocks were tied on hedge fund sentiment, we used a higher market cap as a tiebreaker between them.
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).
A group of technicians in a garage, inspecting car parts and ensuring safety compliance.
General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 64
General Motors Company (NYSE:GM) is an American automotive company that sells trucks, cars, and auto parts and provides software-enabled services and subscriptions. It is best known for manufacturing and marketing vehicles under the Chevrolet, Cadillac, Buick, and GMC brands.
The company recently announced that it will fold its Cruise subsidiary, which was working on developing self-driving taxis, to shift focus to building fully autonomous vehicles for personal use. This has ended a years-long project that General Motors had spent billions of dollars on, leaving the field open for competitors such as Tesla and Waymo. However, the decision is expected to save the company $1 billion per year.
Analysts believe shunning the project will allow General Motors Company (NYSE:GM) to restructure its research and technical teams. The knowledge and competencies achieved in the development of Cruise can be used to improve driver assistance technology for personal cars.
On October 22, General Motors Company (NYSE:GM) announced financial results for Q3 2024. Revenue for the quarter was reported at $49 billion, up 10% from last year, driven by volume growth in both internal combustion engine and electric vehicles. Adjusted EBIT stood at $4.1 billion. Adjusted earnings per share (EPS) were posted at $2.96, beating market expectations by 53 cents and up around 30% year-over-year.
Following the announcement of these results, GM’s share surged 8%, reaching its highest trading price since February 2022. Wall Street analysts are bullish on the stock, with a consensus Buy rating and an average share price upside potential of 12%. Investor sentiment also remains strong, with 64 hedge funds having investments in the company, as of Q3 2024, making it one of the best car stocks to invest in now.
Overall GM ranks 3rd on our list of the best car stocks to invest in 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.