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Strategies & Market Trends : Value Investing
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To: E_K_S who wrote (20510)1/27/2005 5:35:52 PM
From: hivemind   of 78670
 
I have found GM interesting to look into precisely because of the yield. But I'm always afraid to enter. They generate huge operating cash flow but over the last ten years even more cash goes for capex. And yet sales trends are not favorable. So if the capex does not help to produce sales increases, or reduce production costs, etc, seems like just treading water. Then there is the huge and growing debt load.

I'm probably too much of a novice to see the benefits of buying GM at this point, but it seems to me the risk factors outweigh the potential. P/B is low historically, but who can say if it will return to prior levels or if it is permanently adjusted as is.
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