GM Is Cheaper Than Tesla—and One of Our Top Stock Picks for 2022

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American car maker General Motors logo

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Nicolas Ratzenboek / AFP via Getty Images

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This article is an excerpt from Barron’s 10 Preferred Shares for 2022 published on December 17. Click here to see the full list.

Tesla May not be the only winner as the auto industry transitions to electric vehicles. General Motors is as well positioned as any of its peers and is valued at $85 billion, less than a tenth that of Tesla. GM, at about $58, trades for eight times its expected 2022 earnings.

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Under the leadership of CEO Mary Barra, GM (ticker: GM) has high plans to nearly double its annual revenue to about $300 billion by 2030. This includes $90 billion in sales of electric vehicles, up from an estimated $10 billion in 2023. GM is expected to unveil its all-electric Silverado soon.

Investors are skeptical that GM can manage a difficult EV transition and achieve anything close to its ambitious goals, but the stock already casts off a lot of skepticism.

“GM has built a scalable platform and is a leader in both autonomous vehicles and batteries,” says Stellium Capital Management investor Ross Margolis.

General Motors’ controlling stake in Cruise, a top player in autonomous driving that plans to roll out robo-taxi in the coming years, is worth about $17 billion based on the latest minority investment. GM talks about generating $50 billion in revenue from Cruise by 2030.

Morgan Stanley’s Adam Jonas, a GM bull, has a $75 price target on the stock, and conservatively has no value for its legacy car business.

GM enthusiast Ryan Brinkman at JPMorgan sees it differently, saying that investors are effectively getting Cruise and other new business free, fueled by high sales of pickups and sport-utility vehicles powered by internal combustion engines. based on profitability.

Write to Andrew Berry at [email protected]

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