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Yahoo
an hour ago
- Automotive
- Yahoo
General Motors' (NYSE:GM) five-year earnings growth trails the stellar shareholder returns
The simplest way to invest in stocks is to buy exchange traded funds. But in our experience, buying the right stocks can give your wealth a significant boost. For example, the General Motors Company (NYSE:GM) share price is 97% higher than it was five years ago, which is more than the market average. It's also good to see that the stock is up 6.9% in a year. On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price. Over half a decade, General Motors managed to grow its earnings per share at 19% a year. The EPS growth is more impressive than the yearly share price gain of 15% over the same period. So one could conclude that the broader market has become more cautious towards the stock. The reasonably low P/E ratio of 6.30 also suggests market apprehension. You can see below how EPS has changed over time (discover the exact values by clicking on the image). We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on General Motors' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further. When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for General Motors the TSR over the last 5 years was 103%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return. General Motors shareholders are up 8.1% for the year (even including dividends). Unfortunately this falls short of the market return. It's probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 15% over five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. It's always interesting to track share price performance over the longer term. But to understand General Motors better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with General Motors (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process. General Motors is not the only stock that insiders are buying. For those who like to find lesser know companies this free list of growing companies with recent insider purchasing, could be just the ticket. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
an hour ago
- Business
- Yahoo
S&P 500 at new highs: Strategist says it's time to take profits
The S&P 500 (^GSPC) is trading at a new record high, but Girard chief investment officer Timothy Chubb thinks it may be time for investors to take some money off the table. Find out why in the video above. To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here. At the end of the day, I think this is a good time to take some profits. I mean, we have digested so much really since April 2nd, um from, you know, data to tariffs, you know, ultimately a strong earnings season, everything that you, you know, just been going through. But um, the market is starting to lose some steam. It's kind of been this melt up over the last several weeks. Uh we've seen breadth within the market really start to narrow quite a bit, as you're just discussing with the magnificent 7. Uh, really the AI trade has been, you know, keeping this uh, you know, rally going. And I wouldn't be surprised as we kind of turn the page into the second half of this year, uh investors kind of take a step back and, and, you know, again, take some of those profits and and look to um, ultimately the, you know, potentially diversify a little bit with fixed income, especially where, you know, rates are at currently. Hey, Q2 earnings season, those on deck, Tim, do you think that could, could that prove to actually be another positive catalyst for the market? It could be. I mean, earnings revisions were, were, you know, uh revised down quite a bit. Um we've started to see that, you know, moving the other direction more recently, but um, there's still so many cross currents that, you know, may ultimately be impacting some of these companies that removed guidance. I think about 20% of the S&P 500 uh removed guidance for the year. So uh, the bar might be a little lower than uh ultimately, you know, needs to be and and perhaps we, you know, jump over it. Um, as Julie mentioned, you know, it's going to be the uh lowest from a growth rate standpoint in quite some time, but um, still positive momentum. I think the AI capex story and and uh, you know, is really a durable uh investment uh opportunity for uh, you know, us as as well as, you know, these, these companies, you know, trying to raise and make sure that the rails of the AI railroad are are built as quickly as possible. What did you make, Tim? I'm just curious, you know, we talk about trade and tariffs a lot of course, as we should. So President Trump comes out today, uh throwing haymakers at Canada, clearly not happy, right? Making, making some, some threats there, saying, listen, new tariffs are on the way. What's interesting, Tim, about that is caught people off guard. The market did react a bit initially, but then you end the day up all, all green here, right? I mean every popular average in the green. What does that tell us, Tim, as investors? I, I think there's some complacency. I mean, this, this V-shaped recovery has been so hated, right? Um, you know, positioning was offside by a lot of the hedge funds, you know, we've seen that adjust a little bit, but, you know, ultimately it's been, you know, sort of this classic dual, you know, pain trade where we've had a short squeeze higher and then we've had the narrowing leadership more recently. Um, and ultimately, I, you know, I think, you know, retail certainly charging this uh, you know, rally quite a bit. Uh, but people are just, you know, fear missing out. And if we do get a pretty solid earning season here in Q2, maybe some of the tariff impact is not quite uh, you know, baked in the cake uh, just yet for, for some of these companies and and a relatively, uh, I'd say sanguin, you know, outlook for the back half of this year, uh markets continued, you know, could continue to grind higher from here. But, you know, I think the, the key point is why we're back at all-time highs is that we haven't had traded headlines. And so, uh if we start to see this, you know, as we get closer to, you know, July 9th, uh ultimately creep back into, you know, the, the um headlines quite a bit more, um I think the equity markets are vulnerable sort of priced for perfection and in a lot of ways and uh again, it's just been, you know, somewhat fragile, you know, just given the narrowing breath that we've seen recently.
Forbes
an hour ago
- Business
- Forbes
Our 8% Dividend Playbook For The $36-Trillion Debt Panic
The words "Government Debt" with hundred dollar bills in the background. 'Those are some crazy numbers.' An old friend had messaged me, and that line caught my attention. As it turned out, he had 36 trillion numbers in mind: the national debt, in other words. That is a pretty striking figure, and it's fair to ask how the country's debt could go from a trillion dollars back in 1981 to 36 times that today. 'Very irresponsible, imo,' my friend wrote. This sounds like a reasonable response, and many people think this way. But the problem here, from an investment perspective, is that most people look at the debt on its own, without considering the many other factors we're going to delve into today. My quick take: The rising US government debt load is not a good reason to avoid stocks, or, in our case, the 8%+ yielding closed-end funds (CEFs) that hold our favorite stocks. I'm talking about funds holding strong blue chips that form the backbone of the country's economy, like Visa (V), JPMorgan Chase & Co. (JPM) and NVIDIA (NVDA). Beyond Alarmist Debt Headlines Now it is absolutely true that too much debt is unsustainable, and the US government isn't accountable for this debt—we taxpayers are. But there's more to the story than this. In 2017, total government debt hit $20 trillion. That, by the way, was the last time I wrote in-depth on this topic. I still feel the same way I did then: that the US government is actually financially healthier than the average American. That's because then, as now, people tended to look at the debt in isolation (a common mistake!). But the US government has plenty of tools it can use—and trends working in its favor—that make it easier to manage its debt than many people think. Let's start with a key number: the amount of revenue the government collects in a year through taxes and other fees. Today, as in 2017, about 18% of US GDP goes to the federal government. That's $5.2 trillion, at the current size of the US economy. Looked at another way, if Uncle Sam were to divert all of that revenue to paying off the debt (which is impossible, obviously, but stick with me for a second), he'd do so in about six-and-a-half years. Here's the key point, though: That six-and-a-half years is only slightly higher than the six years it would've taken in 2017. And let's not forget that we had a pandemic in there, which caused a big spike in public debt. So, viewed that way, government debt has remained about as manageable as it was eight years ago, and it would likely be more manageable if COVID hadn't come along. Now let's go one step further and stack up debt and GDP growth: Debt/GDP Chart Both federal debt and GDP were growing at almost the same rate before the pandemic, which, as we just discussed, caused a bump in debt. And, of course, GDP took a hit then, too, with the economy in lockdown. As a result, GDP has grown about 55% in the last eight years or so, while total debt has grown about 80%. Obviously, this means America's debt-to-income ratio is worse than it was before the pandemic. But that's not because of a structural issue. We can point at the pandemic as the main cause here, in this case. Still, a one-time hit could be trouble in the long run, right? Sure, but look at this chart. Debt/GDP 2017 The extra government debt due to the COVID-19 crisis looks bad because the numbers are huge, but if we compare it to the bump, and continued accelerated rise, in indebtedness sparked by the 2008/2009 financial crisis, the 2020 debt increase is rather small, as you can see below. Debt Crisis Before 2008, the ratio of US public debt to GDP was around 35%, and in less than five years, it doubled to 70%, where it remained until the pandemic, after which it went above 100% before falling to 96%, where it is now. On a relative basis, the jump in 2008 was clearly worse than in 2020. Yet America survived just fine. So there's no reason to worry, unless and until this chart changes direction. Labor Productivity Above is the real story: labor productivity. It's risen by a third since 2007, meaning Americans now produce about $1.33 in value for every dollar they produced back in 2007. And note how that's been a pretty stable line upwards? America keeps producing more effectively and efficiently: This is progress, growth and prosperity. And now we have AI, which is likely to give productivity another boost. This also explains why the S&P 500 has delivered 10.4% annualized returns over the last two decades, in line with the 10.3% annualized returns it's delivered over the last century. And, yes, during that time, the federal debt grew, as did the US government's income, thanks to higher US productivity producing higher GDP. So if you're thinking of cutting back on your US holdings due to the debt, remember these three things: Instead, now is the time to boost our holdings in the US, and doing so through CEFs yielding 8%+ is hands-down the best way to do it. With CEFs, we get exposure to strong blue chips like the ones I mentioned earlier, often at a discount, since these funds' market prices can—and often do—trade for less than the value of their portfolios. That's our 'discount to NAV' in CEF-speak. Big dividends and big discounts from S&P 500 stocks. Try getting that from an index fund or by buying these stocks 'direct.' It's just not possible. And any fear—and hence bigger discounts—caused by overwrought debt worries just makes our opportunity even sweeter. Michael Foster is the Lead Research Analyst for Contrarian Outlook. For more great income ideas, click here for our latest report 'Indestructible Income: 5 Bargain Funds with Steady 10% Dividends.' Disclosure: none
Yahoo
2 hours ago
- Business
- Yahoo
Warren Buffett's 4 Time-Tested Methods for Surviving Economic Downturns
The chance of recession hitting the U.S. is 40%, according to a recent report from Preparing yourself and having a plan to get through a recession is crucial. Therefore, who better to look to than billionaire Warren Buffett? Warren Buffett: Check Out: The 'Oracle of Omaha' is known for his foresight, and has been a savvy investor for years in times of fortune and famine. His investments have consistently outpaced the S&P 500, according to Bloomberg. How is Buffett taking steps to steel himself and Berkshire Hathaway for the rough times ahead? Read on to find out. In a recent address to Berkshire Hathaway shareholders, Buffett said it's important not to let your inner feelings sway your investments. 'Check emotions at the door,' he said. Buffett went on to say that if every drop has you worried, investing might not be a good strategy for you to take on. 'If it makes a difference to you whether your stocks are down 15% or not, you need to get a somewhat different investment philosophy, because the world is not going to adapt to you. You're going to have to adapt to the world.' Read More: At 94 years old, Buffett has seen many economic slumps in this country. He said in terms of historical context, the stock market we saw earlier this year isn't particularly remarkable. In his stakeholder address, Buffett referenced the Dow Jones Industrial Average dropping 89% during the Great Depression. This drop was worse than what we've seen recently, however, and he warned that the future is what investors should be worried about. 'You will see a period in the next 20 years that will be a hair curler compared to anything you've seen before.' To protect yourself, Buffett recommended liquidating stocks now to have cash on hand before the market dips. Once it drops, he said to use the cash to buy stock and take advantage of the low prices. Buffett himself has been selling off stock recently, suggesting he's getting ready for a major economic downturn. According to Fast Company, Buffett said to invest in companies that you stand behind, not ones that you are following blindly. This way, you can make more informed decisions on how the company will do. Perhaps a company will actually offer consumers something recession-proof, or particularly valuable during a specific time (think Zoom during the pandemic). This helps ensure your portfolio doesn't become obsolete in times of economic hardship, and will thrive during better times. Investing is a marathon, not a sprint. Buffett's marathon has been long, and he's seen that behind every great downturn, the market does rebound. According to CNBC, after the market reaches a low, it's an average of two years before stocks break even again. More From GOBankingRates Mark Cuban Tells Americans To Stock Up on Consumables as Trump's Tariffs Hit -- Here's What To Buy This article originally appeared on Warren Buffett's 4 Time-Tested Methods for Surviving Economic Downturns Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 hours ago
- Business
- Yahoo
This week in stocks: Why BMO Capital Markets thinks Costco shares still have room to run
Every weekend, the Financial Post breaks down the most interesting developments in this week's world of investing, from top performers to surprising analyst calls and stocks you should have on your radar. Here's this week's edition. Do investors at BlackBerry Ltd. (BB) finally have something to cheer about? That's something analysts were musing about after shares of the smartphone pioneer turned cybersecurity play popped by nearly 12 per cent on Wednesday, following an earnings report that showed a first-quarter profit had turned positive. The Waterloo, Ont.-based company also 'slightly' hiked its revenue forecast for the year. Though the stock pared some of its gains, BlackBerry shares still closed out the week up 4.7 per cent per cent at $6.21 in Toronto. BlackBerry had been among the Top-10 gainers on the S&P/TSX composite index as late as Thursday. The upbeat earnings lead Bloomberg Intelligence analysts to hazard that the tech firm 'may be finding its footing' and were followed by a handful of price target increases. The biggest hike on the Toronto-listed shares came from CIBC Capital Markets, which raised its target to $8.24, a 30 per cent premium to Friday's close. The S&P500 hit a new all-time high on Friday despite renewed trade tensions between the U.S. and Canada and analysts are optimistic that there are more gains to come on both sides of the border before the year is out. This week, Brian Belski, chief investment strategist at BMO Capital Markets, reconfirmed his base case for the TSX to hit 28,500 this year, hinging the forecast on several factors including 'relatively resilient' Canadian growth, falling interest rates and improving stock valuations. 'Our view in terms of Canadian equities remains resolute. Namely, Canada continues to provide strong relative value, a converging growth profile with the U.S. and improving equity flows,' Belski said in a note. The TSX is up 7.9 per cent year to date and almost 18.9 per cent since Donald Trump's reciprocal tariffs announcement in early April. Belski's base case implies an additional seven per cent return by year end, and though he thinks U.S. markets will be stronger through the end of the year, he still has the TSX as the net winner for 2025. Costco Wholesale Corp. (COST) has been one of the market's top performers over the past decade, but don't let its big run scare you away. BMO Capital Markets food retail analyst Kelly Bania said the stock has more room to grow and confirmed Costco as a top pick in a note out this week. Her refreshed rating is based on three major announcements made recently by the company: a $10 monthly credit on same-day Instacart orders for executive members; extended shopping hours, also for executive members; and a standalone gas station test taking place in California. 'These new benefits and perks highlight Costco's extreme membership value proposition, particularly the key executive membership base, which accounts for 47 per cent of members but 73 per cent of sales,' Bania said. Bania has set a price target of US$1,175, a level the stock topped on Feb. 13 before slumping in March. Year to date, Costco is up 7.5 per cent and closed Friday at US$985.14. Nike Inc. (NKE) The sports-giant is back in the running after its latest earnings appeared to show Nike's year-long sales slump is coming to an end. Deutsche Bank AG analyst Krisztina Katai lifted her target to US$77 Friday from US$71. Nike jumped 15 per cent on Friday and was trading at US$72.04. Nvidia Corp. (NVDA) The darling of the Magnificent Seven stocks could elevate itself into further rarified territory as it looks to become the first company to reach a US$4 trillion market capitalization. Nvidia's prospects were boosted on reports that its largest customers including Meta Platforms Inc., Microsoft Corp., Inc. and Alphabet Inc. are set to increase spending on artificial intelligence. Shares of the company were up nearly 10 per cent from last Friday and are up 67 per cent after slumping badly in early April when it looked like its chip business would be throttled by trade troubles between the U.S. and China. The consensus price target from analysts who cover the company rose to US$173.47 from US$171.38. Nvidia closed Friday at US$157.75. The week in stocks: Empire, Algoma Steel, and why the case for the trade in war 'keeps getting stronger' The week in stocks: Dollarama still cashing in and silver gets buffed up • Email: gmvsuhanic@ Are you an investor looking for stock ideas and market insight? Sign up for the weekly FP Investor Newsletter here to get the best of the Financial Post's investing news, analysis and expert commentary straight to your inbox. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
