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Blog Posted in avatar   Kyle Busch's Blog

Kyle’s Corner: Hyundai 10X over GM

By Kyle Busch
Posted Apr 10, 2012 in
Hyundai and Kia (Kia is owned by Hyundai) are on a sales roll. The automaker offers some great vehicles and is forcing the other automakers to step up to the plate.
Some of the hot Hyundai and Kia vehicles include the Elantra, Veloster, Soul, Sonata, and Sportage. Progressive styling, reliability, and fuel economy are some of the things that are selling consumers on these vehicles.
We all are aware of how General Motors has used a government (taxpayer) bailout to reorganize. GM has been able to drop unprofitable divisions (Oldsmobile, Pontiac, Hummer, Saab, etc), reduce bloated pay and benefits, and become more efficient.
Some of the competitive GM vehicles include the Sonic, Malibu, Corvette, Equinox, Acadia as well as the upcoming Cadillac ATS.
Stock prices are one indication or gauge of how corporations like automakers are doing in relation to each other.
Hyundai’s (symbol: HYMLF) stock price is about $200 per share. General Motors’ (symbol: GM) share price is about $20.00 per share. This begs the question - Is there an automotive misalignment in the share prices of the two automakers? In other words, is South Korea’s Hyundai vehicles ten times better than America’s General Motors vehicles?
How do the vehicles from each automaker compare? Yes, the Hyundai/Kia offerings are better, but by how much? Are Hyundai’s vehicles twice or three times as good - yea! However, are they 10 times better - no way!
Is hot Hyundai’s stock over valued? Probably by 10 – 15 percent. This would suggest a stock price of about $170-$180 per share.
And as for GM’s share price, what might be a ‘realistic’ level? Well, based on the ‘vehicles,’ it could be argued that Hyundai’s are three times better. This would put GM’s share price at about $55-$60 per share.
Sometimes markets become misaligned and I think this is indeed one of those times. The market needs to catch up to the reality that GM is building some very competitive vehicles. Yes, there is no denying that Hyundai and Kia are on top, but GM is much closer than its stock price indicates!