General Motors Valuation Is Now Officially Ridiculous For A Profitable Company; Time To Buy?

Summary:

• GM’s P/E ratio has fallen below 5, despite reporting ongoing profits of around a $10 billion annual run rate.
• I remain cautious. Technological changes, not just the EV revolution but also telecommuting and ride-hailing, may not be done pressuring traditional automakers, which could impact GM’s performance.
• Reduced commuting and over-inventory of cars suggest a long-term decline in auto sales, making GM less attractive.
• Although GM’s valuation is tempting, my consistent avoidance of auto stocks has proven beneficial, and I continue to recommend avoiding GM.

I’ve been avoiding General Motors (NYSE:GM) stock for almost a decade now, ever since I first began writing for Seeking Alpha in 2015. My reasons for avoiding it have always been somewhat idiosyncratic; I prefer to look at auto stocks

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.