Buy General Motors on the Dips
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Ida Hansen
Buy General Motors on the Dips
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A previous article on this site detailed why Home Depot (NYSE: HD) should be bought for long term gains as it had fallen due to short term woes.  The same now goes for General Motors (NYSE: GM), which is off nearly 20 percent for 2014.  General Motors is down due to problems with its products.

That should be looked upon as a buying opportunity.

General Motors is down for the last week, quarter, and six months of market action (chart below).  It will probably continue to fall as more bad news comes about the products.  But it will recover, just as Toyota Motors (NYSE: TM) did from problems with its motor vehicles.

General Motors is now very attractive as a value, growth, and income stock.

Due to the falling share price, General Motors has attractive valuations.  That is especially true for the price-to-cash ratio.  On a price-to-earnings growth ratio it is also undervalued.

It is very promising as a growth stock, too.  The forward price-to-earnings ratio is just 7.  Earnings per share next year are expected to increase by nearly 50 percent.  For the next five years, it is expected to be over 20 percent.  Its growth will be very strong abroad.

As an income stock, General Motors is very attractive, too.

At present, the average dividend yield for a member of the Standard & Poor’s 500 Index (NYSE: SPY) is around 2 percent.  General Motors has a dividend yield of nearly 3.5 percent.  It the share price falls more, the dividend yield will rise.

General Motors should recover, making it a profitable long term buy.

It is a much stronger company with its recovery from The Great Recession.  General Motors has a very strong market presence in China, the largest market for cars in the world.  The dividend yield pays investors to wait for the share price to rebound.



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