Jason Mann General Motors Corporation GM-N PAST TOP PICK Apr 05, 2018

He likes the carmakers. Trades at 4x forward PE. They're already making money (some companies are not). We don't know what will happen with tariffs, true, but tariffs on non-US carmakers will benefit the American ones. Sell the $45 put for April and collect $1.70.

Ford and GM have some of the lowest PEs around (7.3x and 4.3x) vs. the 22x S&P average. Ford pays a 6.2% dividend yield, while GM has a huge buyback plan. Incredibly cheap--until the tariffs started. Remember: the car-makers were a huge reason why Trump used tariffs in his first term which lead to the USMCA trade deal. But now Trump wants to take away the qualities that made US cars competitive and affordable. Today, the car-makers got a one-month reprieve from Trump's tariffs and shares jumped. But if the car-makers wind up paying these tariffs, are we okay with the U.S. replacing cheap Mexican labour with expensive U.S. union labour? That's why these stocks are so cheap--their earnings are in grave danger. Value traps. A 25% tariff on Mexican imports is a subsidy for foreign car companies like Kia.

It's all about tariffs. Despite tariffs, GM's chart shows there is an escape hatch in the tariff war and GM will come out of it well. Valuation is a very  cheap 6.8x enterprise value to EBITDA. Is a cash flow machine, with 20% of market cap is in buyback share mode. They recently increased their dividend. Are well managed. Best of breed. GM has done a nice pivot into EVs, though EV consumer adoption has slowed down, but will come back.

Sells at 4x PE, a red flag. If Trump's tariffs hit Canada and Mexico over auto parts, GM has the most to lose. 

They report Tuesday. With tariffs, nobody knows how much they will inflate the price of cars. Listen for their call.

Not founder-run or founder-owned, and that's an immediate "no" for his firm. ROIC has been volatile. Quite a bit of debt. Capital intensive. Lots of competition in the space.

(Note the short timeframe.)  Today, as then, trades at an incredibly low valuation. Makes ~$8 EPS a year, so still very cheap. Iconic American brand that manufacturers a lot in the US, so it'll be a winner on the tariff trade.

Continues to like it, despite many headwinds, including a $5 billion charge this year from tariffs. Shares used to be incredible cheap in terms of EBITDA. They have a good model and compete well against Ford. They have an EV program. He's happy to sit tight until the wind shifts.

The supply chain and consumer demand is in flux but the valuation is very cheap and doesn't reflect the current and long term fundamentals. He does acknowledge the challenges.