GM Zooms Past Forecasts

"We're pleased that GMAC returned to profitability in the second quarter, with significantly better results than the first quarter. GMAC's auto financing and insurance businesses continues to post strong results while the company continues to progress in addressing the challenging conditions in the residential mortgage market," GM said.

The automaker also improved its closely watched cash position. It reported $27.2 billion in cash on its balance sheet as of June 30, up from $24.7 billion at the end of the first quarter. Meanwhile, it's expecting $5.6 billion in proceeds from the sale of its Allison Transmission unit -- a deal that has been delayed by financing complications in the debt market.

Toomey says any upside for GM shares in the back half of 2007 will likely come from labor cost reductions that the U.S. auto industry is seeking in its current negotiations with the United Auto Workers union over a new master labor contract.

"I think chances are good that we'll make some progress on that front," says Toomey. "The union understands that these companies need to be viable competitors if the union jobs are going to survive."