Singapore Markets open in 5 hrs 58 mins

General Motors (GM) Rides on Truck Launches Amid Recall Woes

Zacks Equity Research

On Aug 9, we issued an updated research report on General Motors Company GM.

The Detroit, MI-based auto giant is engaged in designing, building and selling of cars, trucks, crossovers and automobile parts worldwide. The company is also expanding the autonomous vehicle business.

In second-quarter 2019, General Motors’ earnings surpassed the Zacks Consensus Estimate. In the quarter, the sale of Chevrolet Silverado and GMC Sierra light-duty crew cabs grew year over year in double digits. This was the second consecutive quarter of witnessing growth for the same. This was in line with the automaker’s strategy to launch high-content, high-margin trucks. However, in the quarter, revenues missed the Zacks Consensus Estimate and were lower than the prior-year quarter figure.

Moreover, the sale of crossovers and trucks has grown modestly in the United States and China since 2015. In order to capitalize on this trend, the auto major revamped its crossover lineup. The company is launching all-new full-size pickups that will be followed by full-size SUVs.

However, of late, General Motors has been recalling vehicles in large numbers. In October 2018, the company announced that its China joint venture, Shanghai GM, will recall over 3.3 million vehicles in China from Oct 20. Further, in September 2018, General Motors recalled 1.2 million pickup trucks and sport utility vehicles across the globe due to problems pertaining to power steering. Also, the company is expected to face weak used-car pricing, a challenging pricing environment in the United States and China as well as more pressure on commodity costs.

In the past six months, shares of General Motors have outperformed the industry it belongs to. Shares of the company have gained 1.6% against the industry’s decline of 4%.

Zacks Rank & Stocks to Consider

Currently, General Motors has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space are Fox Factory Holding Corp FOXF, CarMax, Inc. KMX and Gentex Corporation GNTX, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fox Factory has an expected long-term growth rate of 16.7%. In the past six months, shares of the company have rallied 22.9%.

CarMax has an expected long-term growth rate of 12.6%. In the past six months, shares of the company have moved up 36.9%.

Gentex has an expected long-term growth rate of 5%. In the six months, shares of the company have returned 36.8%.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>

Click to get this free report CarMax, Inc. (KMX) : Free Stock Analysis Report Fox Factory Holding Corp. (FOXF) : Free Stock Analysis Report General Motors Company (GM) : Free Stock Analysis Report Gentex Corporation (GNTX) : Free Stock Analysis Report To read this article on click here.