While I believe that GM at its current price of around 37 is overvalued. Management is making smart moves and keeping their eye to the future.
The auto industry is "over the hill" and moving down in the current auto cycle. It is smart management to adjust capacity and refine strategy at this point.
The auto industry, like many industries, is moving and shaking with changes coming faster and faster. It is no longer the business of old where auto companies primarily competed with other auto companies. Auto companies are competing with the technology industry and other industries as well. That is precisely why it is really smart to "get out ahead of the curve" and make strategic moves. GM under Mary Barra's leadership is taking calculated risks that are essential to GM's survival.
Sure the stock's current price is a little high in my estimation. The auto industry's cycle will pull all the players down going forward, but keep your eye on GM. GM has the "special sauce" that all excellent companies possess - great management that keeps looking forward. The days of the good ole boys of Detroit and huge bureaucracies are long gone.
Mary Barra spent her entire career at GM and knows the company inside and out. You might think that would taint her leadership, but her actions clearly identify her leadership as a "new breed”.
With the plant closings and other news, the market got ahead of itself and pushed the stock up to what I see as an overvalued position. As this auto cycle continues to evolve, keep your eye on their performance. There will be some nice entry points coming up in the future.
Now remember - keep your eyes peeled. A good driver always keeps their eyes on the road ahead!
