General Motors (GM 2.10%) may be an afterthought when it comes to investments for many, but it may also be the best automotive stock for investors to get their hands on today. Not only does the company thrive with sales of full-size trucks and SUVs, but it's making strong progress with electric vehicles (EVs) and returning value to shareholders at an impressive clip.
Here are three reasons GM might be the next stock you want to buy.
1. Eating shares like Pac-Man
There are two primary ways for companies to return value to shareholders: through a dividend or through share repurchases. In the case of share repurchases, as the company buys back shares and retires them, the earnings per share increases, which drives the value up.
General Motors has been incredible at returning value to shareholders through share buybacks, and you can see how the stock price has responded as the number of shares outstanding declines.
It started in late 2023, when GM announced a significant $10 billion accelerated share repurchase program, which was completed by the fourth quarter. GM approved a further $6 billion buyback in June 2024, and the automaker also increased its dividend by 25%.
The automaker's cash flow is capable of handling such movements. GM generated $14 billion in adjusted automotive free cash flow in 2024 and returned roughly $7.6 billion to shareholders via dividends and buybacks, leaving plenty of liquidity for growth and strategic moves to offset tariff impacts.
2. Blossoming EV lineup
When it comes to EVs, it's not really a matter of if, but when they consume the roads globally. It's a tricky thing to balance sales of highly profitable gasoline-powered SUVs and trucks while trying to sell EVs, but General Motors has found a balance. While posting strong financial results driven by its internal combustion engine line, the company also posted EV sales up 94% during the first quarter, grabbing an impressive 10.4% market share in the U.S.
That parks GM in the No. 2 spot for EV sales in the U.S., and marks Chevrolet as the industry's fastest-growing EV brand, driven by the Equinox and Blazer EVs. In even better news, roughly 60% of the EV buyers are trading in a non-GM vehicle, bringing more consumers into the brand.
GM will still need to work diligently on reducing EV costs, especially batteries, for this to become an important chunk of its business, but it is the future of the industry, and GM is well-positioned in the U.S. for now.
Chevrolet Equinox EV. Image source: General Motors.
3. Big trouble in China
China's market has been engulfed in a brutal price war, driven by a plethora of competitors in a blossoming EV market, and foreign automakers have paid the price -- they are struggling in China right now, big time.
Fortunately, GM recognized this early and made a massive restructuring effort, which included rightsizing operations, launching new vehicles, and optimizing dealer costs and inventory. All in, the charge would cost GM $5 billion in restructuring costs, but it did manage to report encouraging results in China during the final quarter of 2024. Following the introduction of new vehicles, sales sequentially surged 40% during the fourth quarter, the largest jump since the second quarter of 2022.
Is GM a buy?
As far as General Motors goes, the company is firing on all cylinders right now. Not only is it selling gasoline-powered vehicles at a high clip, and highly profitably, the company is expanding its EV prowess. It's also buying back shares at a clip so rapidly that its stock has only soared as a result.
All this means General Motors is one of, if not the top, automotive stocks to buy now.
