GM “looks a lot more attractive than Ford” here, trader says

Retailers are picking their favorites in the automotive space as the race for electric vehicles accelerates.

Between automakers Ford and General Motors, GM appears to have a more solid setup in the charts, President and Founder of Newton Advisors, Mark Newton, told CNBC’s Trading Nation on Friday.

Wedbush on Friday kicked off a GM cover with an outperformance rating, saying the company is expected to benefit from a “revival of electric vehicle growth in Detroit.”

GM has underperformed Ford since the start of the year, up just 40% from Ford’s 64% gain.

“Both of these stocks have seen huge surges over the past 16 months,” Newton said at over 200% each. “However, GM stands out as being the clear favorite between the two.”

Referring to a graph of the ratio of GM’s performance to that of Ford, Newton pointed out that not only is the ratio oversold, but that it has just hit a key trendline that suggests it is time to ‘buy GM.

“It has been accurate to use ratio tables like these on many different pairings. I recommend that people do this. But in general, it seems attractive to buy Ford at 14 for some people versus GM at 58. “, did he declare. “GM has been a much better technical stock over the years, and to me it looks a lot more attractive than Ford at these levels.”

Two macroeconomic drivers could boost many auto stocks in the near future, said Steve Chiavarone, portfolio manager, equity strategist and vice president of Federated Hermes.

“We think there are two key themes that kind of relate here. One is the EV theme itself, which we think is a long-term growth driver” from a fundamental point of view. and sustainable, said Chiavarone in the same “Trading Nation”. interview.

“Second, these are value cyclical stocks. Any moderation or weakness that we’ve seen in auto sales over the past couple of months really has to do with the lack of supply, certainly not the lack of demand,” a- he declared. “We think you’re going to see how these supply chain issues resolve themselves.”

This short-term growth spurt, the ongoing history of electric vehicles, and still low valuations in the automotive space make them an attractive business, Chiavarone said.

“You’re talking about an 8.5-fold multiple for these stocks, or at least sort of a single-digit high number, which we think is a huge value,” he said.

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