General Motors Company (GM - Free Report) cautioned employees in Brazil about losses and informed that this situation requires a tough turnaround plan, per Reuters. The company is encountering challenges in South America which makes it imprudent to deploy capital at this moment. However, if this leads to shutdown or halt in production in the continent, it will have serious consequences on the company’s employees.
In South America, the conditions in Brazil are improving since the 2015-16 recession. However, Argentina had been fighting due to a recession in 2018, with surging inflation and declining peso. Meanwhile, investors are keeping an eye on how economic reforms will change things in these key South American countries.
Notably, the government of Brazil extended subsidy to the auto industry, which has for long struggled to keep up with production in other regions. In sync with this, a 15-year tax break package was offered to automakers in 2018. However, per experts, Brazil cannot continue to offer subsidies to the key industries as it believes that the abolishment of protectionist policies will lead to more competitiveness. However, given the losses in South America, General Motors needs to devise a tough turnaround plan.
Over the past year, shares of General Motors have outperformed the industry it belongs to. Over this time frame, shares of the company have declined 10.8%, whereas the industry lost 16.9%. Further, General Motors has an expected long-term growth rate of 8.5%.
General Motors currently flaunts a Zacks Rank #1 (Strong Buy).
A few other top-ranked stocks in the auto space are Fox Factory Holding Corp. (FOXF - Free Report) , Dana Incorporated (DAN - Free Report) and AutoZone, Inc. (AZO - Free Report) . While Fox Factory currently sports a Zacks Rank #1, Dana and AutoZone have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fox Factory has an expected long-term growth rate of 17.9%. Over the past year, shares of the company have risen 63.3%.
Dana has an expected long-term growth rate of 2.9%. Over the past month, shares of the company have gained 36.8%.
AutoZone has an expected long-term growth rate of 12%. Over the past year, shares of the company have increased 7%.
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