I like GM as well. I’ve owned the stock since 2017, betting on management’s commitment to a future of no crashes, no emissions, and no congestion. While this may seem like a novel idea, GM’s technology development has been continuous and significant over past few years. Until recently, Wall Street barely noticed GM’s strategy shift and capital expenditures toward a world of electric and autonomous vehicles. Today, however, the stock is up almost 250% from the pandemic-driven lows of last year. It has increased nearly 45% this year versus only a 1% climb for Tesla, the darling for many EV investors (I own Tesla stock as well).
While Tesla has a market capitalization of nearly $700 billion, GM’s market cap is only $84 billion. GM still is significantly undervalued in my opinion. This is what Bill Miller recognizes as well. When asked by Barron’s about an undervalued stock, Miller responded with, “I like General Motors.” He believes the company is close to converting its fleet of ICE vehicles to EVs. Given the company’s investments in autonomous vehicle technology, battery development, electric vehicles, and a new EV commercial business, Miller believes the current stock price can be 100% higher. I believe the stock price will be dramatically higher over the next 10 years.
Importantly, Miller recognizes that Tesla will not own all of the EV industry profits in the future. Zero-sum games rarely exist in business categories where one company wins while all others lose. The EV world will be no exception to this rule even with Tesla’s first-mover advantages. For every Coke, there will be a Pepsi. Amazon invented a new cloud category through its AWS business. But Microsoft’s Azure cloud business is extremely profitable today as well. Walmart has not been killed by the digital retail world pioneered by Amazon. Even Amazon is learning to profit in a digital advertising industry driven by first-mover Google, and a rapidly growing Facebook.
I believe GM will be one of the winners in a new automotive world established by Tesla. Today’s company truly isn’t “your father’s General Motors.” For the long-term investor, it’s a good time to jump into the stock given the company’s current low valuation.
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Disclaimer
TaaSMaster, LLC is not a registered investment advisor or broker/dealer. All investment opinions expressed by TaaSMaster, LLC are from personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors may occur.