The resurgence of the U.S. automakers shouldn’t be overlooked by investors. If recent sales figures and new productunveilings at the 2012 North American Auto Show are any hint of what’s to come, investors would do well to consider buying American again.
Both Ford (F) and General Motors (GM) saw increases in their share of auto sales in December 2011, with Ford’s sales up 10.1% and GM sales up 4.6% for the month. Sales for 2012 are expected to beat 2011, according to industry watcher Edmunds.com. That means both Ford and GM should see continued strengthening of their respective bottom lines this year.
Crowds around Cadillac, Volt, Mustang, Taurus, Focus
Already, throngs of car lovers are hitting the show floor at the North American Auto Show, and with a significant presence of new models and concept vehicles, Ford and GM will attract loyalists and converts to the 2012 new models. During the Charity Preview event at the auto show, both Ford and GM maintained the largest crowds of spectators, as guests kicked the tires on the latest offerings from the top U.S. automakers.
GM sported a significant Cadillac presence, signifying its commitment to expanding the luxury brand; yet it was the Chevy Volt that drew the most interested crowds as intrigued show goers “unplugged” the Volt from its charging station and enjoyed the simplicity of the plug-and-drive vehicle.
Ford made the reinvigorated Mustang its centerpiece, and enthusiasts weren’t disappointed. The retooled Taurus and Focus also drew attention from a myriad group of car lovers.
Fuel for your portfolio?
GM’s share price has rebounded from a double bottom, rising 27% since December, while Ford has risen 23.8% in that same time. Yet, both companies still sit “low” on their charts following strong selloffs throughout the second half of 2011.
GM could see its stock price reclaim 2011 highs as it continues to retool old plants for new products and models, and as it continues to regain lost market share. With resistance in the $26.50 range, GM has some work to do; but above that price, continued expansion of sales and profits could put the resurgent automaker in $28-$30 range this year — a potential gain of 25% from its current share price.
A break in price above $12.80 for Ford could mean significant upside in the stocks, and if 2012’s sales remain on project pace, Ford could likely regain its most recent range of $16-$18, representing a gain of 33%.
Given the recent rise in auto sales, the upbeat projections for 2012, and a brightening economic picture in the U.S., I think U.S. automakers will put the pedal to the metal in 2012. And with potential gains offered by Ford and GM shares, jumping in the driver’s seat now could give your portfolio some fuel.