General Motors Is a Stock to Buy Now

In the late 90s and early 2000s Detroit's Big Three automakers were known for poor vehicles and awful management decisions. No one wanted to buy their vehicles and hardly any investor wanted to touch their stocks with a 10-foot pole. It's hard for some to believe that General Motors (NYSE: GM  ) is actually a valuable company to invest in – but I believe GM is a stock to buy now.

Gunning for that No. 1 spot
The two simplest parts of the investing equation are the top-line revenues and bottom-line profits. GM has much work to do – copying Ford's (NYSE: F  ) "One Ford" strategy – to improve its lagging bottom-line profits. However, recent new vehicle sales and future catalysts clearly show GM could take the crown in global sales – feeding its top-line revenues. Here's why GM is poised to overcome Toyota (NYSE: TM  ) and become the legitimate No. 1 automaker in the world.

Chevrolet does work
GM's largest brand, Chevrolet, sold over 1.18 million vehicles across the globe in the first quarter. If you're counting like me, that makes it the 10th straight quarter of record global sales. The Chevrolet brand is doing well globally but is also up 4.8% compared to a year ago in the U.S. market, with 469,000 vehicles sold. 

The 2014 Chevy Silverado – GM's most profitable vehicle – will try to steal market share from rival Ford before it can release the next-generation F-150. GM's new Silverado comes at a good time as the housing rebound is helping the full-size-truck segment surge and the older model was due for some updates to better compete.

Complete refresh
GM currently has the oldest vehicle portfolio because it has lacked the funds to refresh or redesign its vehicles after bankruptcy. With its balance sheet finally improved GM is able to update its vehicles, and update it will. Look at what it has planned – it's a doozy.

The plan is to refresh, redesign, or replace almost 90% of the vehicles sold in North America by the end of 2016. That's about double the pace of the three-year period ending in 2012. Its largest brand, Chevrolet, is going to have 25 new or refreshed models all on its own – helping secure future vehicle sales. Let's take a look at another very important brand for GM investors. 

GM's luxury brand, Cadillac, brought in a 49% sales increase last month driven by the ATS model, which has been a huge hit with consumers and critics alike. This year at the Detroit Auto Show the ATS was named "Car of the Year" and consumers have been buying it up. Similar to its strategy with Chevy, Cadillac is rolling out 10 new or refreshed models by mid-decade and plans to follow the success of the ATS. 

Top and bottom lines
GM is essentially wiping the dust off of its entire vehicle portfolio; if it's successful it could be the catalyst could send the stock price soaring. Look for GM's refreshed vehicles to increase market share and sales numbers as the vehicles roll out of production.

When it comes to the bottom line for investors, GM will have to continue to improve its operational efficiencies the way its rival Ford has done. CEO Dan Akerson said the goal is to boost operating margins in North America up to 10% by mid-decade. That's a high margin for automakers, yet a very real possibility if GM continues success with its high-margin Cadillac lineup and full-size trucks.

Like its newer vehicles, I believe GM is a refreshed company. I definitely think GM is a stock to buy now.

Worried about GM?
Few companies lead to such strong feelings as General Motors. But ignoring emotions to make good investing decisions is hard. The Fool's premium GM research service can help, by telling you the truth about GM's growth potential in coming years. (Hint: It's even bigger than you think. But it's not a sure thing, and we'll help you understand why.) It might help give you the courage to be greedy while others are still fearful, as well as a better understanding of the real risks facing General Motors. Just click here to get started now.


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