Summary

GM maintains healthy fundamentals; the dividend is not a tough pill to swallow.

Future market expansion in China points to future growth, especially with electric vehicles.

Technical analysis reveals a cup-and-handle pattern forming, indicating a potential breakout.

Other indicators are tentatively bullish but much more indecisive.

I would recommend holding at the current time until a clear trend emerges.

Introduction

General Motors (NYSE:GM) is one of the major American automotive industry giants. Home to auto brands Chevrolet, Buick, Cadillac and GMC, GM has had an excellent year, strongly reflected in its increased stock valuation. Since reaching its YTD high of $46.11, it has since slid back down to $42.88 at the time of writing, representing an 8% correction.

I believe that GM is still undervalued, but investors may continue to see further corrections in the short term. However, from a long perspective, I think that GM is currently positioned in the market to capture a significant portion of the American electric vehicle and autonomous car markets in the future. The stock has good fundamentals, and the company has been able to increase profitability; while GM may be stalling out at the current time, we should expect to see continued growth long term.

First and foremost, I still believe that GM has a very solid balance sheet and good fundamentals. Considering the firm’s financial health today, it seems like a far cry from the old GM. In addition to its work in developing its brands, I think that in the long term, GM’s vision to investing in Lyft for $500 million and developing the Maven program gives it a head start on its competitors. Changing its operating model allows GM to only produce to meet demand instead of overproducing and selling overstock at a loss.