General Motors stock (NYSE:GM) has rallied by almost 9% over the last week (five trading days), outperforming the S&P 500, which gained about 6.5% over the same period. The stock also outperformed the broader indices over the last month (around 21 trading days), remaining roughly flat compared to the S&P 500 which was down by almost 3%. While GM and other automotive stocks at large have seen declines this year, amid rising interest rates, supply chain headwinds, and concerns about U.S. GDP growth, GM stock’s valuation appears very reasonable at current levels with its outlook also remaining reasonably optimistic. This could be making the stock attractive to value investors, in a rising interest rate environment. At the current market price of about $39 per share, GM stock trades at just about 5x the mid-point of projected 2022 earnings. Growth is also likely to pick up a bit this year, with revenue rising by about 20% per our estimates. The company is also looking at more aggressive long-term growth targets, as it electrifies its model lineup, previously noting that it intends to double revenue to between $275 billion and $315 billion by 2030 while expanding margins to between 12% to 14%.
However, now that GM stock has seen a rise of about 9% over the last week, will it continue its upward trajectory in the near term, or is a decline imminent? Going by historical performance, there is a roughly equal chance of a rise or decline in GM stock over the next week. Out of 78 instances in the last ten years that GM stock saw a five-day rise of 9% or more, 41 of them resulted in GM stock rising over the subsequent week. This historical pattern reflects 41 out of 78, or about 53% chance of a rise in GM stock over the coming week, implying a neutral near-term outlook for the stock. See our analysis on GM Stock Chance of Rise for more details.
Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last ten years data
- After moving 9% or more over five days, the stock rose in the next five days on 53% of the occasions.
- After moving 1% or more over ten days, the stock rose in the next ten days on 50% of the occasions
- After moving 0.5% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 54% of the occasions.
This pattern suggests that GM stock is unlikely to see major gains in the near term.
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|Trefis Multi-Strategy Portfolio||1%||-16%||228%|
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