Chart of the Day – $GM: From Zero to Hero

by Dan November 13, 2013 12:38 pm • Commentary

GM is up 3.2% today on reports that the the U.S. Government continues to sell down its stake that remains from its bailout of the automaker back in 2009.  The U.S. Treasury which was once the largest shareholder with close to 1 billion shares, now is the 4th largest with only 68 million or only a 4.9% holder. Investors are clearly viewing the sales as a lifting of an overhang as the company will once again be able to buyback shares and pay dividends with a massively de-levered balance sheet that has half of its market cap in cash.

The one year chart below shows the stock butting up against the prior 52 week highs, attempting to breakout.

GM 1yr chart from Bloomberg
GM 1yr chart from Bloomberg

If the stock finally gets through and makes new highs, the obvious level to watch is the all time highs (since out of bankruptcy in 2010) of about $39.50, above that it is in uncharted territory.

GM since 2010 from Bloomberg
GM since 2010 from Bloomberg

GM has shown impressive relative strength compared to Ford and Toyota over the past month, a major change compared to earlier this year.  That is despite the company’s recent disappointing monthly sales figures.  GM is now trading around 13x trailing P/E vs. around 10x for Ford.  But Warren Buffett owns GM, so not bad company for those looking for a breakout of the stock in the coming weeks.