This article originally appeared on RealMoney.com. To read more content like this AND see inside Jim Cramer's multi-million-dollar portfolio for FREE, Click Here NOW.It is hoped that more and more participants have learned one yielding characteristic of the stock market: Bad news creates opportunity. How many of you wish you could go back to 2009 and reinvest all over again? In the past five years, the stock market has tripled; it's unlikely we will see another five-year period like that in the next 20 years.
But put aside the stock market and take a look at General Motors (GM). What was originally thought to be a routine recall of vehicles with faulty ignition switches has turned into headline-making news. GM apparently knew about this problem as far back as 10 years and failed to take action. So, year to date, shares are down 14% while the S&P 500 is up approximately 2.2%.
GM shares are trading at $35, yielding 3.5% and with a forward earnings multiple of 7x. Next year, GM will probably generate anywhere from $5 billion to $7 billion in free cash against an enterprise value today of $62 billion. The company is no longer affectionately known as "Government Motors," as the U.S. Treasury has exited its entire position in the stock.
Consider that GM today has less than $8 billion in net debt while Ford Motor (F) has about $90 billion in net debt. GM is valued at around 5x earnings before income, taxes, depreciation and amortization on enterprise value while Ford's applicable number is 12x.