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Strategies & Market Trends : Value Investing
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From: E_K_S1/27/2005 3:38:29 PM
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Picked up a few shares of GM. Stock goes x-dividend next week and currently yields 5.48%. Current earnings are estimated to slip to around $4.00/share FY2005 from $6.50 FY2004 but still translates to a forward PE around 10. Company selling below book value but assets are hard to value as this industry is always retooling. My main concern are the off book pension and medial liabilities but management has begun to address these liabilities by funding a portion of this liability with debt last year (issued new bonds last year).

My strategy is to nibble at a small position now and add to it in the future if a lower entry point provides such an opportunity. I will be looking at 2006 and 2007 earnings. GM is working to expand their marketing in China with a 27% sales growth last year. GM is also working on developing new hybrid cars/trucks.

I see a low risk investment that provides a decent yield while you wait. Who knows, GM may even get some new truck sales with Fords big truck recall announcement made today.

My price target is $55-$60 in 18-24 months. Current price is around $36.50. I believe one can achieve a 20% annualized return (including dividends) given a two year holding period.

EKS

Just my opinion and I have been wrong in the past. Also I have never owned a GM car either....
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