President-Elect Donald Trump’s decision to appoint billionaire hedge fund manager Scott Bessent as the next secretary of the Department of Treasury was well received by markets yesterday with the S&P 500 and Dow Jones reaching new highs.

However, auto stocks have sold off sharply on Tuesday amid Trump’s plan to implement a 25% tariff on imported goods from Canada and Mexico. This would dissolve the USMCA (United States-Mexico-Canada) free trade agreement with auto giant General Motors GM expected to feel the brunt of the impact.

With operations throughout North America, GM shares have fallen -8% in today's trading session. Optimistically, investors may be wondering if the selloff could be a buying opportunity as GM hit a 52-week high of $61 a share to start the week and is still sitting on +50% gains year to date.

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GM’s Strong Financial Performance

Leading to the recent peak in GM has been the company’s strong financial performance with total sales now expected to increase 5% in fiscal 2024 to what would be an annual record of $180.02 billion based on Zacks estimates. Despite GM’s top line projected to dip -2% next year, the company would remain the largest U.S. automaker in terms of revenue ahead of Ford F and Tesla TSLA which are expected to bring in $174.28 billion and $99.65 billion in FY24 respectively.

More impressive, GM is on pace to set an annual record for profitability as well with earnings forecasted to soar 34% in FY24 to $10.29 per share versus EPS of $7.68 last year. Furthermore, FY25 EPS is projected to expand another 2%.

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GM’s Attractive Valuation

Most glaring in regards to General Motors stock being a buy-the-dip candidate is that GM trades at 5.8X forward earnings. Trading at a considerable discount to the S&P 500’s 25.3X forward earnings multiple and its Zacks Automotive-Domestic Industry average of 13.1X, GM also trades beneath Ford’s 6.2X with Tesla at a noticeable premium of 137.2X.

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As the largest domestic automaker in terms of revenue, GM trades at just 0.3X sales with its industry average at 1X and the S&P 500 at 5.4X.

Image Source: Zacks Investment Research

 

GM's EV Expansion

Most compelling to long-term investors has been GM’s expansion in the electric vehicle market. Led by its Chevy Equinox EV, GM’s EV sales most recently skyrocketed 192% during Q3 2024 to 32,095 units compared to 11,006 EVs sold in the prior-year quarter. As of now, GM has surpassed Ford in terms of total EV sales in the U.S. this year behind Tesla.