General Motors Company : Wait for a signal
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05/04/2012 | 10:55am
Opinion : Bullish above 20.2 USD
Target price : 24.2 USD Potential: 8.18%
Stop loss: 19.1 USD
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NYSE
Auto / Truck Manufacturers |
General Motors released a few days ago, net income higher than expected for the first quarter thanks to strong demand in North America and a smaller loss than expected in Europe. Net income represents $1 billion dollars against 3.15 billion a year earlier. Revenue was $37.8 billion, up 4.4% compared with 36.2 billion for the first quarter 2011.
Besides, as shown by the “enterprise value/revenue” ratio, General Motors is trading at a very low level in comparison with historical benchmark. The enterprise value is estimated at 0.05 time its revenue and the PER is currently at 6.14x.
Graphically, for several trading sessions, the stock is crumbling and it is affecting by the pressure from the 20-days moving average. In weekly data, the short-term trend is bearish and the share should be back on the USD 20.15 long-term support successfully tested several times in the past.
In this context, investors could take a buying position on the USD 20.15 weekly support to target USD 24.2 resistance. A stop loss will be fixed at USD 19 in order to cover the position.
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Alexandre Nutte
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