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Yesterday I added General Motors to my 10 Perfect Stock Picks Special Report on my subscription site. (If you want to subscribe, you probably got a 20% off offer in your email today.)

Here’s what I wrote in that Special Report on the buy.

My #4 Pick in my 10 Perfect Stock Picks is General Motors (GM). I can hear the consternation. GM a perfect stock? How can that be? Just look at this company.

Well, yes, just look at the company and remember that you’re buying a stock and not a car.

The company’s report on third-quarter sales, released on October 3, makes a strong case for buying this stock before most investors catch on. GM reported a 24.3% jump in third-quarter U.S. vehicle sales to 555,580 vehicles, and a “modestly improving” inventory situation. The sales for the latest quarter included a 27.4% decline in Buick deliveries, a 49.5% rise for Cadillac, a 29.5% increase for Chevrolet, and a 23.9% rise for GMC. Most importantly for my argument, GM said it reached record quarterly sales for the Chevy Bolt electric vehicle (EV) and the Bolt electric utility vehicle (EUV), which totaled a combined 14,709 vehicles. WASHINGTON (Reuters) – General Motors Co said Monday it is ramping up its electric vehicle assembly plans, hiking production of the EV Chevrolet Bolt and other vehicles. This was the highest ever quarterly sales for the Chevrolet Bolt EV and Bolt EUV. In June, you’ll remember, GM said it would sharply cut Bolt prices after it halted sales for six months following a battery recall. This time around GM said it would boost Bolt production for global markets to more than 70,000 in 2023 from about 44,000 vehicles this year. The highest level of annual sales for Bolt came in 2021 at 24,828 vehicles. The company also repeated its plans to launch its Chevrolet Silverado EV, Chevrolet Blazer EV, and Chevrolet Equinox EV in 2023, and that all these launches were on schedule. (On the electric vehicle front. in August GM and LG Energy Solution’s joint venture, Ultium Cells, is considering a site in Indiana for a fourth $2.4 billion U.S. battery cell manufacturing plant.)

I think investors are radically undervaluing the changes at GM. Morningstar calculates a fair value for GM shares of $70. The stock closed at $32.87 on October 3. You’re looking at a better than 50% discount to fair value.

What are some of the other changes at General Motors–outside its new emphasis on electric vehicles? Thanks to closing some plants and restructuring its retiree healthcare cost, the company has reduced its North American breakeven point to a total of about U.S. industry sales of 10 million-11 million vehicles, assuming an 18%-19% share, according to Morningstar. Which means that at the bottom of the auto cycle GM doesn’t have to dump cars onto rental car fleets at reduced prices. The company is targeting total revenue of $300 billion by 2030, up from revenue of $132 billion in the trailing 12 months. Earnings should outpace those revenue gains if the company hits its target of 2030 total company adjusted EBIT margin of 12%-14%, up from 11.3% in 2021 and 7.9% in 2020.

We have a very clear idea of the company’s schedule: The plan is to introduce 30 electric vehicle models through 2025 with two-thirds of them for sale in North America. The GM goal is to sell 2 million electric vehicles a year by the middle of the decade.

And if that seems like a stretch, well, the stock is cheap enough so that investors won’t get torched by a miss or two. And the reduction in break-even sales means that a recession won’t be nearly as damaging to GM as it would have once been.

How cheap?

The stock is down 38.95% for 2022 to date as of September 30. The price-to-earnings ratio is a low 6.10, down from a five-year average of 18.06. The price-to-sales ratio is almost too small to see at 0.36 and the price-to-book ratio, thanks to those plant closings, has dropped to 0.73 from a five-year average of 1.30.

I’d say you can start dollar cost averaging into this one now, despite the dangers of a looming recession. Set your month (or quarterly) purchase levels low enough, however, so that you can buy more shares during any big downturn in the market or in General Motors stock specifically. I can’t dollar cost average in my online portfolios but I would like to track this stock from here so I’m adding it to the Jubak Picks Portfolio tomorrow October 4 so that you can use the performance of this position as a guide for your own portfolio. I’m setting an initial target price of $45 a share.

The company reinstituted the dividend on its stock in August after a hiatus for 2021. The dividend yield is currently 0.28%.

My target price is $60.