This company is in the automobile sector, and shares look to be very inexpensive at current levels. Despite all the recall troubles and litigation issues, hedge funds and mutual funds are continuing to stick with General Motors Co. (NYSE: GM), as many view the stock as very undervalued. GM trades just below an incredible 5.67 times estimated 2016 earnings. The company, like competitor Ford, has benefited from incredible sales in China to boost revenue. GM invested heavily in China decades ago, and it grabbed a big chunk of what is now the world’s largest auto market.
Long-term patient investors that can look beyond current issues may stand to make outstanding money on the auto giant, especially as low gasoline prices continue to push new buyers into showrooms. The stock was hit hard recently as Ford missed estimates and much of the blame was placed on incentives, which have been much lower at GM
The company recently reported very solid second-quarter earnings, and with gas prices staying at the lowest levels in years, and GM producing some of the best new models in years, the future for the battered stock looks very good. The analysts also feel the company is well prepared for the next downturn.
GM investors receive an outstanding 4.9% dividend. The $42 Merrill Lynch price target compares with the consensus target of $36.69 and Tuesday’s closing price of $31.07.
Philip Morris International
This company has continued to grow global market share and makes good sense for total return investors now. Philip Morris International Inc. (NYSE: PM) is the world’s leading international tobacco company, with six of the world’s top 15 international brands and products sold in more than 180 markets.
In addition to the manufacture and sale of cigarettes, including Marlboro, the number one global cigarette brand, and other tobacco products, the company is also engaged in the development and commercialization of reduced-risk products (RRPs), the term it uses to refer to products with the potential to reduce individual risk and population harm in comparison to smoking cigarettes. Through multidisciplinary capabilities in product development, state-of-the-art facilities and industry-leading scientific substantiation, Philip Morris aims to provide an RRP portfolio that meets a broad spectrum of adult smoker preferences.
The company reported earnings slightly below estimates, but the full-year underlying guidance remains the same. The analysts expect the second half of the year, especially the fourth quarter, to be very solid.
Shareholders are paid a 4.15% dividend. Merrill Lynch has a $115 price target, and the consensus target is $105.46. Shares closed on Tuesday at $98.40.
While there is no guarantee that these stocks all thrive after the November election, they all have very strong and mature franchises that should continue to drive earnings regardless of who sits in the Oval Office starting in 2017.
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