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TheStreet Open House

General Motors Round II: So Far, So Good

Stocks in this article: GMFTM

In 2011, General Motors posted an income of $7.6 billion, a record in the storied giant's 103-year history. When you look at the numbers for 2011, it makes sense why the new General did so well. With 9.025 million units sold, it dethroned Toyota (TM) as top seller of the year.

Taking it one step further, Chevrolet, a GM brand, sold more than 4.75 million units, which is a global sales record for a specific brand.

Where's the trouble for the stock? The answer is obvious for anyone who has been an investor in an either General Motors or Ford. The companies are more efficient, sales have rebounded and they're posting record profits. So where's the love? Simply put, it's because of Europe.

The economic slowdown across the pond has caused the automakers to lose billions. Last quarter alone, General lost about $200 million, an amount that weighs on both earnings per share and the stock price.

It was estimated that losses would be close to $2 billion for 2013, but with the strong start to the year, it might not be as bad as many investors had first thought.

In other words, the darkest days may be gone. Investors have been buying into the recent talks that Europe is bottoming -- or close to bottoming -- and that losses should begin to shrink relatively soon. For the autos, let's hope this is the case, since this is the anchor holding them down


On the flip side, domestic sales continue to provide a boost to the share price. With the release of the May sales numbers, it showed that 1.4 million units were sold. The annualized sales rate now hovers close to 15.5 million units and continues to show incredible strength in the domestic market.

While the company is no longer part of the Dow Jones Industrial Average, it has taken a step in the right direction with its addition to the S&P 500, which marks just how far the company has climbed since 2008 and how much adversity it has overcome.

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