GM will build electric vehicles, and the total investment will be about $2 billion.
The new Cadillac LYRIQ will be the first EV to be produced at Spring Hill
Bank of America has a buy rating for GM and a price target of $65
General Motors (NYSE: GM) stock rose from $28.5 to $38 in less than a few weeks, and the current price is $35.82. General Motors has found strong support above $30, but the price is still unable to break through the $40 resistance.
Fundamental analysis: Even with the COVID 19 pandemic, GM is doing well
General Motors is one of the largest automobile manufacturers and ranks 18th in the Fortune 500 ranking of the largest U.S. corporations by total revenues. The next few months will be fiercely competitive for the global automotive industry, but even with the COVID 19 pandemic, sales of GM cars are going well.
General Motors’ sales in the U.S. fell by 10% to 665,192 vehicles in the third quarter, which is not bad and above expectations. The Chevrolet brand had its best quarter ever with 45% growth, while the Cadillac brand also recorded 45% growth.
“While the economy recovered significantly in the third quarter, retail car sales were even more resilient,” GM Chief Economist Elaine Buckberg said. “Super-low auto loan rates have boosted auto retail sales; even more strength comes from pandemic demand,” said Elaine Buckberg.
If we compare the total equity of $43 billion and the market capitalization of $52.7 billion, we can see that this stock is not overvalued and now might be a good time to trade in General Motors stock. Another useful piece of information for potential investors is that this company has paid more than $6 billion in dividends to its shareholders in the last three years, and this number may increase in the future.
Bank of America has a buy rating for GM and a target price of $65, which I think is a bit optimistic. The share price rose after the company reported that GM will be a strategic manufacturing partner of Nikola.
According to the report, Nikola will use General Motors’ Ultium battery system and Hydrotec fuel cell technology from Hydrotec, which will add value to both companies. The company also announced plans to build electric vehicles, and the total investment will be approximately $2 billion.
The new Cadillac LYRIQ will be the first EV to be produced at Spring Hill, and this will certainly attract new customers and increase the company’s revenues. This stock could be a good long-term investment, but perhaps now is not the best time to invest in General Motors stock, as the price may weaken in the coming weeks.
Technical analysis: bulls keep control of the stock
Data source: tradingview.com
On this diagram I have marked important resistance and support levels. The important support levels are $32 and $30, $38 and $40 represent the resistance levels. If the price jumps above $38, it would be a signal to buy General Motors stock and we have the open path to $40.
A rise above $40 supports the continuation of the upward trend and the next price target could be around $45. On the other hand, it would be a strong “sell” signal if the price falls below $30 and we have the open path to $25.
Summary
Bank of America has a buy recommendation for General Motors and a price target of $65, which I think is a little optimistic. Even with the COVID 19 pandemic, GM’s business is doing well, and the company recently announced that it will start building electric vehicles. There are also some risks when it comes to trading General Motors stock, but as long as GM’s price is above $30, that stock will stay on the bull market.
