Reasons To Buy:

General Motors outperformed the industry it belongs to over the last six months. Share price of the company gained 30.1% over this period, while the industry rose 16.6%.

In 2017, General Motors is focused on strengthening its brands, increasing retail sales and maintaining operating discipline. The company will gain from a strong economy and increase in product offerings by the four brands of the company. General Motors also expects 2017 adjusted earnings per share in the range of $6.00 to $6.50, the mid-point of which is higher than the 2016 figure of $6.12. The automaker also expects revenues, adjusted EBIT and adjusted EBIT margin to remain stable or improve from 2016. The automaker is also expected to generate around $8.2 billion of adjusted automotive free cash flow, up from the 2016 figure of around $7 billion. The upbeat outlook is based on robust retail crossover sales.

General Motors is currently in Phase III of its Captive Expansion plan, which commenced in 2010. In this phase, the company aims to increase its share of prime loan channel and grow its floorplan business in North America. It also intends to expand its geographical footprint and product portfolio in the rest of the world. Finally, the company aims to increase loyalty among users by expanding its customer relation management activities. The adjusted EBT is expected to double from the 2014 level by 2018 on the achievement of the complete captive penetration levels.

General Motors follows a comprehensive capital allocation strategy per which it intends to return its available free cash flow to shareholders while maintaining an investment-grade balance sheet and cash and cash equivalents of $16.6 billion as of Jun 30, 2017 to boost long-term growth. As part of this strategy, General Motors announced an initial share repurchase of $5 billion, which was completed in third-quarter 2016. In the second-quarter 2017, General Motors repurchased $1.5 billion of common shares. For 2017, the company to return up to $7 billion to shareholders in the form of dividend and share buyback.

General Motors believes that the continuous enforcement of its strategic plan will help it to achieve adjusted earnings before interest and tax (EBIT) margin of 9–10% by early next decade. To achieve this target, the company needs to drive sustained growth in its core business in addition to focusing on several other initiatives. The automaker strives to excel in its products and technology, expand the Chevrolet and Cadillac brands globally, grow its presence in China and boost the results of the GM Financial segment. Further, General Motors will focus on ensuring cost efficiency and expects to reduce costs by over $5.5 billion by curtailing purchasing, manufacturing and administration expenses from 2015 through 2018. This will offset the investments made toward the launch of new products, brand building, engineering and technology upgrades. Additionally, General Motors will maintain its focus on improving capital efficiency to reduce capital expenditure over the long term. It expects capital expenditure to be 5%–5.5% of revenue in the future.

General Motors is increasing capacity investment in emerging markets to enhance its global sales. The company expects half of the global sales growth by 2030 to come from emerging markets. The company is trying to gain from growth in emerging countries via product launches and the new Wuling plant. In January 2017, General Motors announced plans to launch 18 new and refreshed vehicles in China in 2017 and 60 models through 2020.

General Motors is focused on investment in innovative technologies and vehicles which should provide sustained growth while maximizing shareholder value. In September 2016, it signed a deal with Canada’s Unifor Union to invest about $420.84 million in its Canadian facilities. General Motors will invest $303.86 million and $113.95 million, respectively, in the Oshawa and St. Catherines manufacturing plants in Ontario. Post this, the Oshawa plant will be the company’s first North American facility to manufacture both trucks and cars, while the St. Catherines engine and transmission plant will be able to accommodate an engine production shift from Mexico. An investment in the parts distribution center at Woodstock is also expected.

General Motors is undertaking several initiatives to make its vehicles more advanced, safer and fuel efficient. The automaker is presently focusing on autonomous vehicle development. The acquisition of Cruise Automation will help General Motors to use Cruise’s deep software talent to develop autonomous vehicle technology. In April 2017, the company announced the launch of the Super cruise. This is the industry's first true hands-free highway driving technology and will be available from late 2017 or 2018. General Motors will also focus on alternate transportation models, which are expected to generate additional revenues and profits. In Jan 2016, it launched a new car-sharing service called Maven to seize the opportunities in ride- and car-sharing services. In just 11 months, the automaker has launched three products under this service and expanded it to 17 states in the U.S and Canada. Maven is also collaborating with Uber to allow people to lease qualified vehicles at discounted rates with no mileage limits. In October 2016, General Motors invested in China’s Yi Wei Xing (Beijing) Technology Co. Ltd., a leading car-sharing technology solution provider to explore personal mobility opportunities in the country.

General Motors established its Cadillac brand as a separate business unit with global headquarters in New York. This will help the company capitalize on opportunities in the luxury automotive market and expand the brand’s presence outside North America. The initiative to launch a range of new Cadillac products is likely to help the company achieve global growth. It is expected that Cadillac will introduce nine models in China over the next five years. The brand aims to increase its global annual sales to over 500,000 cars by 2020. The company's hands-free 2018 Cadillac CT6 is expected to debut later in 2017. General Motors' expense towards the development of autonomous vehicles is expected to be roughly $150 million per quartern in 2017 and 2018 for research and development.

In March 2017, General Motors signed an agreement with French automaker, PSA Group, for the sale of its Opel/Vauxhall subsidiary and GM Financial’s European operations. The transaction, valued at €2.2 billion (around $2.3 billion), is expected to close in end 2017, subject to regulatory approval and customary closing conditions. General Motors’ Opel/Vauxhall business has remained unprofitable over the last few years. With the sale of its European businesses, the company intends to focus on its core automotive business and development of new technologies. The company will retain its engineering centre in Torino, Italy. Through the sale, the company is working toward its transformation goals. Further, the company announced other restructuring activities internationally. The company will stop selling vehicles in India. However, it will continue its manufacturing operations in the region. The company will also sell its South African operations to Isuzu Motors. General Motors will also streamline its regional headquarters office in Singapore. The steps are expected to help save roughly $100 million a year in a sector of General Motors' global business that lost about $800 million in 2016.

In October 2017, General Motors announced its plans to stop manufacturing gasoline and diesel in future and focus more on the development of electric vehicles. In line with the plan, it expects to roll out two new electric vehicles (EVs) in the next 18 months. In addition to that, General Motors will be adding 20 electric or hydrogen fuel cell vehicles in the market by 2023. It also has plans to build electric fast-charging stations in the United States to charge electric vehicles.