Morgan Stanley names General Motors as no. 1 automotive stock pick

GM Chief Financial Officer Dan Ammann

General Motors’ ‘fortress balance sheet’ strategy has caught on and has earned it first place on Morgan Stanley analysts’ automotive stock rankings. Post-bankruptcy GM is getting rid of debt and holding onto cash and says it will decide what to do with some of its $33.8 billion once the economy stabilizes.

GM Chief Financial Officer Dan Ammann said that any payments to its pension fund or shareholder dividend would come once the company feels it has enough funding for future products.

“A ‘fortress GM’ strategy enables the company to ride out years of downturn without sacrificing its long-term revival,” analyst Adam Jonas said. “GM’s castle isn’t impenetrable, but its walls are high and thick.”

Ford ranked sixth-place on the list. The Dearborn automaker has only $8 billion of net cash. Jonas said that if the United States goes into another deep recession, Ford could have more debt than cash within 18 to 24 months.

– By: Omar Rana

Source: Free Press