Stocks soared at the open and kept climbing on Thursday, lifted by the successful launch of General Motors, which opened at above $35 a share—higher than its initial price of $33 a share. What is the outlook for the automaker? David Silver, equity research analyst at Wall Street Strategies, shared his insights.
“A lot of the problems that were there are gone, but there are sill a few that really irk me about General Motors —Europe, profitability overseas, particularly in China and India, and how they are going to pay for these pensions,” Silver told CNBC.
“[GM] said it’s going to take about 4 to 5 years," he continued. "They’re not getting any money from this IPO, but hopefully they are able to pay off that pension and that’s the biggest thing right now.”
Silver also warned investors not to get roped into the hype around GM stock.
“If you go through the hype and once all that’s into the stock, then you’ll see the fundamentals that will push the stock,” he said. “And they’re not nearly as good as you can see for the Fords, Toyotas and the Nissans of the world because [GM] still has a lot of problems.”
The New GM
Instead, Silver said Ford Motor is a more attractive investment. Silver has a “buy” rating on Ford and has a $22 price target.
“I like Ford—it still looks like a better buy," he said. "Ford is still making cars that people want to buy."
______________________________
Scorecard—What He Said:
- Silver's Previous Appearance on CNBC (Nov. 10, 2010)
______________________________
More Market Intelligence:
- GM Aiming for No Debt on Balance Sheet: CEO
- Would You Buy a GM Car?
- Complete Coverage: The New General Motors
______________________________
CNBC Slideshows:
______________________________
CNBC Data Pages:
______________________________
______________________________
Other Major Automakers:
Toyota
Honda
Nissan
______________________________
Disclosures:
No immediate information was available for Silver or his firm.
______________________________
