General Motors Target Price $2

General Motors Corporation (GM) is one of the largest automobile manufacturers in the world. But weak North American sales, falling production volumes, and rising raw material costs are increasing our concern for the stock.

Significant incentives to stimulate sales and keep inventories lean are eating into margins. Furthermore, GM sales are hampered by poor resale values. In addition, General Motors is at a disadvantage compared to its competitors owing to huge pension and health care costs.

General Motors has also delayed new model launches and slowed production. It apprehends a significant cash crunch and might even face bankruptcy if the U.S. economic slump continues and it fails to get any government aid. These issues compel us to rate the shares a Sell with a six-month target price of $2.00.

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