Why This Automaker Is Still So Cheap

The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Brendan Byrnes and consumer goods editor/analyst Austin Smith discuss topics across the investing world.

In today's edition, Brendan and Austin discuss recent earnings from General Motors; in particular, why the company's stock remains so cheap. One of the main reasons is GM's exposure to Europe, where the company has lost over $15 billion since 1999. Investors have been hoping to hear GM's plans for turning around in Europe, a problem mainly due to an overcapacity problem and the continent's struggling economies. The fact that the U.S. government still owns over 30% of GM's common shares could be another factor helping keep the share price low, not to mention the company's $20 billion-plus pension obligations. Having said that, the stock is dirt cheap at under five times earnings. Is that justified, or does GM rate as a buy?

Considering GM has lost over $15 billion in Europe since 1999, many investors may be nervous about investing in a company that's internationally focused, but they shouldn't be. Emerging markets are giving new life to established American companies with deep pockets. As these industry titans look abroad for more sales, they aren't starting with a blank slate -- they're bringing their operational excellence to new markets and thriving. To uncover these picks today, we invite you to read a copy of our free report: "3 American Companies Set to Dominate the World." The report won't be available forever, so we invite you to enjoy a free copy today. Click here to get your copy today!

At the time this article was published Austin Smith has no positions in the stocks mentioned above. Brendan Byrnes owns shares of Ford. The Motley Fool owns shares of Ford.Motley Fool newsletter services recommendBorgWarner, Ford, and General Motors Company. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story