General Motors Company (NYSE: GM) is a value play, perfectly suited to investors that are nervous of a downturn ahead, says DCLA’s Sarat Sethi.
Sethi explains why GM is worth owning at present
The stock that trades at six times earnings is down roughly 40% for the year. Making his case for the legacy automaker this afternoon on CNBC’s “Power Lunch”, Sethi said:
They’re forecasting $7 – $9 billion of free cash flow and expected to earn close to $7.0 this year. They’re talking EBIT at $13 billion; they have a strong balance sheet and they’re forecasting things aren’t that bad.
A day earlier, General Motors said its adjusted per-share earnings in the fiscal first quarter handily topped Wall Street expectations.
Sethi is also bullish on General Motor’s push into EVs
Sethi also likes General Motors for the fact that it’s committed to investing and expanding its footprint in the global market for electric vehicles. Speaking with CNBC’s Tyler Mathisen, he noted:
GM kept the cash to pay down debt and not give investors a dividend. So, they’re reinvesting back in two parts of the business. The current business and the EV business that they expect, over time, will produce more than 0.5 million cars.
Last month, the Detroit automaker spent $2.10 billion to increase its ownership stake in Cruise, its self-driving business, further highlighting it’s devotion to the future.
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