Is General Motors a Good Investment?

PHOTO CREDIT: Hummer

OVERVIEW

General Motors Company is a company based in the United States. The company designs, manufactures, and sells vehicles around the world. The company operates under the Chevrolet, GMC, Buick, and Cadillac brands. The company is known to sell sedans, SUVs, pickup trucks, as well as many other types of vehicles. The company was founded in 1908.

Why You Should?

  1. General Motors is a great reopening play in an investor’s portfolio. As the economy starts to reopen and as people have more money, the demand for cars will rise once again. General Motors can use this demand to recover from the impacts caused by the pandemic. This reopening growth will benefit the company and its investors.
  2. General Motors will benefit from some policies under a Biden administration. From EV tax incentives to the lowering of geopolitical tensions with countries like Canada and Mexico are some of the many ways why General Motors will continue to see strong growth under a Biden administration. This growth over the next 4 years (if not more) will benefit investors in the company as well.
  3. General Motors continues to see strong demand for many types of vehicles, especially pickup trucks and SUVs in the North American market. Furthermore, the company’s brands are known to produce great and comfortable vehicles. This strong demand will help the company grow across all of its markets in the future. This will also benefit investors in the company.
  4. General Motors sells many kinds of vehicles. From compact sedans to powerful trucks (all at different price points), the company has a vehicle for everyone. This will help the company go through times of weak demand for some of the companies with products as they can rely on other strong-performing parts of the business. This diversity will also benefit investors in the company.
  5. The company has started to invest heavily in the EV space. The company released brand new electric vehicles, like the new Hummer EV. The entrance of a company like General Motors into the EV space will further incentivize many individuals to purchase an EV car. This growth in this industry will benefit the company’s future performance and will also benefit investors in the company.

Why You Should Not?

  1. General Motors faces tough competition from many automakers around the world. Some of these companies include Ford, Fiat-Chrysler, and many others. Furthermore, General Motors has not fared well against the competition like Tesla, one of the leaders in the EV space. In order for GM to grow in the EV space, they will need to compete with Tesla and others as well.
  2. The COVID-19 pandemic has hurt the demand for vehicles around the world. As people had less disposable income and as the demand for travel fell, General Motors started to report lower sales numbers for some of its vehicles. Supply chain issues and higher costs due to the pandemic have also hurt the company and its investors.

MY OPINION

I think that General Motors is a decent long-term investment due to its position as a good reopening play, positive policy impacts from the Biden Administration, strong demand for its products, a diverse portfolio of vehicle brands and types, as well as its growth in the EV space. However, impacts from the pandemic and tough competition might hurt the company and its investors in the future.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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