In fact, buying either GM or rival Ford (F) means that "75% of what you are buying is a perspective on the economy," said Michael Yoshikami, chief investment strategist at Bay Area-based YCMNET Advisors, which manages about $1 billion in assets. "[If] you are seeing no double dip, no high inflation, unemployment drops, then these stocks are a buy."
"People buying into [GM] are late entrants in the consumer story," Yoshikami said. "If you already missed the boat on consumer stocks, this is a last chance to get in, because auto companies are the last to recover."
In general, Yoshikami prefers cheaper consumer stocks, such as Costco (COST) and Wal-Mart (WMT). For autos, he prefers Ford because "Ford has more opportunity in China and Ford has been overall a better run company."While GM's offering is technically an IPO, it is not at all typical for the genre. It does not present an opportunity to buy in early on an innovative new product that will soon have consumers buzzing and technologies adapting. "We follow IPOs very closely," Yoshikami said. "Anything that has the word 'China' or 'Internet' or 'India' in the name has done well. But GM is a cash flow company -- not a hot products company -- so you'd better be buying it for fundamentals and cash flow." Of course, while IPOs are common events, IPOs by companies that sell 11.5% of all the motor vehicles in the world and 18% of all the vehicles sold in the U.S. are not so common. What makes General Motors an attractive option besides its market presence, is that it reduced costs in bankruptcy; it is making money at a low point in the automotive sales cycle and it is well-positioned in the world's fastest growing markets. For the moment, GM benefits from the performance of its closest competitor, Ford, a poster child for corporate turnarounds. Ford shares rose 334% in 2009 and are up about 62% in 2010.
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