The New General Motors Is Taking on the World

NEW YORK ( TheStreet) -- When it's time to buy a new car I'm like most consumers, I want the most for my money which is another way of saying that I want my money's worth.

So I shopped and did a careful search. In my best version of an "orange-to-orange" fair market comparison I settled on a car manufactured by the Buick division of GeneralMotors ( GM) .

Dollar-for-dollar I felt the irresistible urge to purchase a Buick La Crosse and I've been happy with my choice ever since. To see what it looks like here's a photo that speaks for itself .

When I'm driving my Buick I'm reminded that this isn't the old GM I've purchased but the new one. I also own an older Park Avenue model that I've driven for years so you might say I'm a "veteran."

Even the company calls itself "the New General Motors" and you can see the determination and the wave of passion GM is riding when you visit its web site.

GM has recreated itself with a lofty vision to build and sell the best quality autos in the world. The company currently builds and sells nearly 10 million vehicles worldwide.

Amazingly, its No. 1 market is China, not the U.S. which is No. 2. GM's trailing 12 month revenue is nearly $153 billion. In the most recent quarter ending June 30 its total cash tallied close to $26 billion.

This is almost as much as the $26.75 billion total debt it has on its books. GM's balance sheet is looking healthier with every passing year since that ominous moment in 2008 when it filed for Chapter 11 bankruptcy.

The U.S government bought up a large percentage of GM stock early on thus enabling the company to reorganize. It did so in late 2010 and has been determined to buy back shares from Uncle Sam.

As of last count the federal government still owns around 16% of the outstanding shares. That's great news for the United Auto Workers Retiree Medical Benefits Trust which owns more than 140 million shares.

Thanks to the determination and commitment of its leadership GM is selling at slightly below the July 25 52-week high of $37.71. In the latest quarter it booked EBIDTA (TTM) of $7.8 billion and net income available to common shares of $4.53 billion.

GM's diluted EPS (TTM) for the most recent quarter showed a drop of more than 23% yet it equaled $2.79 per share. Not too shabby in a worldwide economy that's been slowing down.

The chart below going back to late 2010 when it emerged out of bankruptcy illustrates how far GM's stock recovered to the point it's now trading at a one-year forward price-to-earnings ratio of around 8. GM Chart GM data by YCharts

It faces some stiff competition in the quarters ahead in improving its EPS and revenue-per-share. Yet shares of GM have a price-to-earnings-to-growth (PEG) ratio (5-year expected) of only 0.68. This suggests that the stock price isn't overvalued and may still be considered a bargain.

GM has worked hard to be a leader in its industry and it claims to know the definition of success. GM Chairman and CEO Dan Akerson says it best, "We win when the customer says we win."

At the new GM, the company has made a strong and open commitment to its customers, employees, partners and stakeholders. Its "five principles that guide us in everything we do":
  • Safety and Quality First
  • Create Lifelong Customers
  • Innovate
  • Deliver Long-Term Investment Value
  • Make a Positive Difference

So far so good, in my humble opinion, and that takes into consideration the imperfections as well. GM was prescient enough to sell more cars in China than any other U.S. car manufacturer while shining up its image at home for resilience, endurance and quality.

In the company's own words,
Our 212,000 plus employees work in 396 facilities touching six continents; they speak more than 50 languages and touch 23 time zones.
From designing and engineering state-of-the-art plants and developing new vehicles and technologies to creating new marketing programs, our team members are valued for their unique contributions.

With that attitude toward customers and employees GM's immediate future looks solid and shines bright. As long as it holds to the five principles that it claims guides them "in everything we do" the future may include the greatest accomplishments in its 105-year old history.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Marc Courtenay is the founder and owner of Advanced Investor Technologies, LLC, as well as the publisher and editor of www.ChecktheMarkets.com.

Courtenay holds a Master's of Science degree in Psychology from California Polytechnic State University, and is a former senior vice-president of Investments for two major brokerage firms. He's been a fiercely independent investment "investigator" and a consulting contributor to the investment publishing world for over 30 years. In addition to his role as an investment publisher and analyst, he serves as a marketing consultant to the investment media industries.

In his role as a financial editor, he specializes in unique investment strategies, overlooked stock investments, energy and resource companies, precious metals, emerging growth companies, the prudent use of option strategies,real estate related opportunities,wealth preservation, money-saving offers, risk management, tax issues, as well as "the psychology of investing". Because of his training and background in Clinical Counseling and Psychology, he enjoys writing about investor behavior, the ┬┐herd mentality, how to turn investment mistakes into investment breakthroughs and the stock market's behavioral trends and patterns.


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