GM Is Closing the Year in Style
DETROIT (
) --
GM
(GM) - Get Report
is closing out one of the most eventful years in its history on a positive note.
On Thursday, the stock hit $36.98, its high since it began trading on Nov. 18. It closed Thursday at $36.82, up 80 cents. In the six weeks since GM went public, its shares have traded in a narrow window between $33 and $36.
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The shares have been bolstered by
buy recommendations from five analysts who initiated coverage this week. The latest was ConvergEx Group strategist Nicholas Colas, who wrote on Tuesday that the auto cycle has started to turn higher and that, "if you believe the U.S. economy can continue to expand in 2011 and beyond, look at the shares of General Motors to provide leveraged exposure."
Colas set a price target of $43, about ten times his $4 earnings estimate for 2011. Analysts surveyed by Thomson Reuters estimate $4.20.
GM emerged from bankruptcy in July 2009. In May 2010, the company reported its
first quarterly profit since 2007. Subsequently, the timing of its IPO was
fortuitous, because the industry sales rate has been rising steadily this year, and nearly every person in the industry is optimistic about 2011 sales.
Additionally, at a time of rising fuel prices, GM and
Ford
(F) - Get Report
are both seeking to
increase their presence in the small car market. Unfortunately, that effort is going to take some time. According to a recent report by UBS analyst Colin Langan, Ford production is just 12% small cars while GM production is just 11% small cars.
Still, GM seems to have
hitched its star to the Chevy Volt. The car " shows the world that this company, this state and this country can set standards for automotive technology, rather than just lag it," said Mark Reuss, president of GM North America, at a November event celebrating the start of Volt production. "We have created the new soul of this company and of Chevrolet as a brand."
On Thursday,
The Detroit Free Press
named GM CEO Dan Akerson as one of eleven auto industry leaders to watch in 2011. The newspaper said Akerson has to prove he can lead the largest U.S. automaker and that "he has taken responsibility for prodding executives to produce enough (Volts) to meet demand and to think big enough to sell more and more."
GM currently plans 10,000 Volts in 2011 and 45,000 in 2012, but Akerson has hinted the number could rise. Asks
The Free Press
, "Will Akerson be best remembered for the Volt?"
-- Written by Ted Reed in Charlotte, N.C.
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Ted Reed