Tuesday, December 6, 2011

GM Is Worth a Test Drive

General Motors (NYSE:GM) — The world’s second-largest car maker went public again in 2010, 16 months after emerging from bankruptcy. But the stock took a nosedive following its public offering at $33 and fell to almost $19 in October.

Q3 earnings beat analysts’ forecasts and the stock rebounded. But guidance for the full year was adjusted lower, and the stock reacted by testing the October low. And estimates for 2012 have been lowered as well.

However, analysts are strong in their conviction of earnings of $3.55 in 2012 and $4.93 in 2013. And they look for a price target of $32 next year.

Technically, GM may have double-bottomed at around $20. If so, the fundamental analysts could be right and GM is a buy. If bought at current levels, a stop-loss should be placed on the stock at $19.

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