General Motors Bulls Try To Hold Ground In Hopes Of Another Advance

General Motors Company GM shares have been struggling to hold up above important technical "correction support" after pulling back following a nice run to the upside. The effort to hold up above support comes following the better-than-expected auto sales data from a week or two ago. Can the positive momentum continue for the auto sector in general and for GM in particular? Let's take a look at GM's fundamental and technical picture to get a feel for the situation: What the bulls see in General Motors… Some cheap valuation metrics:

• A PE of 7 versus estimated EPS growth of 14% in the next year
• An enterprise value of $83.57 billion that easily trumps the market capitalization of $57.24 billion
• A price-to-book ratio of only 1.57
• A price-to-sales ratio of only 0.37
• Positive operating free cash flow of $8.46 billion
• A return-on-equity ratio of 11.66%
• A current ratio of 1.24
• An attractive dividend yield of 4% annually

What the bears see in General Motors

• Estimated revenue growth of only 2% for next year
• Very thin 3% profit margins that spin off negative levered free cash flow of $7.37 billion annually
• A return-on-assets ratio of only 1.46%

Some troublesome balance sheet metrics:

• Cash of only $22 billion versus total debt of $48.26 billion
• A debt-to-equity ratio of 131.05

The technical take on GM stock Technicians note that General Motors shares finished last week at just above the near-term support level of $34.91. As long as that support level holds on a weekly closing basis, they note that the stock could be in for more upside – perhaps up to the $41.50 area. However, if support breaks down at $34.91, a quick shot lower to the $32.36 horizontal line support would likely occur. Overall GM shares are offering the bulls a relatively low risk entry just above important short-term support. That noted, the company and the stock will need the economy to improve further in order for more profits and stock price appreciation to occur and for the company to be able to clean up its balance sheet. There are a few weeks until the next auto sales data is scheduled to be released. Until then, traders and investors alike will be most likely relying on the stock's technicals for guidance.