General Motors Stock Eyes Highest Close Since July

General Motors made a flurry of moves last week

Oct 12, 2021 at 11:30 AM
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Last week, General Motors Company (NYSE:GM) made headlines after Engine No. 1 and Wolfspeed (WOLF) both showed interest in the carmaker's electric vehicle (EV) efforts. Now, eyeing its highest close since July, GM is worthy of a closer look.

At last check, the shares were up 1.6% to trade at $58.99. General Motors stock is up 41% in 2021, bouncing off the $48 level back in September. Keep an eye on $60 looming above, which is double GM's Oct. 15 annual low of $30.95. 

General Motors stock appears to be undervalued at a price-earnings ratio of 6.75. However, the automotive company holds a higher level of risk as an investment than most would expect. To start off, GM has a relatively weak balance sheet with $24.7 billion in cash and $111.8 billion in total debt. In addition, General Motors has been on a downward trajectory in some key fundamental areas for a while now. For example, GM's revenues are down about 5% since fiscal 2018, despite having grown its trailing 12-month revenues by a considerable 14% in comparison to fiscal 2020. In addition, General Motors stock has a forward price-earnings ratio of 7.59, which is still extremely attractive but suggests a decline in earnings for the automotive brand.

General Motors has had significant progress on the bottom-line over the past couple of years, with net income increasing by roughly $16.5 billion since reporting $3.88 billion in net losses for fiscal 2017. Furthermore, with GM's large market share and recognizable brands, General Motors stock remains in a strong position within its industry to continue expanding and exploring new opportunities like electric vehicles (EVs).

What's more, GM's Schaeffer's Volatility Scorecard (SVS) sits at 88 (out of 100), suggesting the stock has usually exceeded option traders' volatility expectations in the past year.

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