5 Best Stocks to Buy Under $50

2. General Motors Company (NYSE:GM)

Stock Price as of May 27: $38.57

Number of Hedge Fund Holders: 76

General Motors Company (NYSE:GM) is a Detroit, Michigan-based automobile manufacturer that is on the back foot due to the electric vehicle (EV) revolution in the US. Furthermore, the global supply chain disruption has also played a part in creating challenges for auto manufacturers to fulfill demand.

General Motors Company (NYSE:GM) stock is currently trading at a forward P/E ratio of 6x only as opposed to the average P/E ratio of 9x for the companies in the S&P 500 Index. This reflects a significant discount against the broader market, making it an attractive proposition. The heavy discount should not be warranted as the company is targeting to see its top line grow by 23% YoY in 2022. Although the automotive industry is going through uncertain times due to supply chain disruptions and the EV revolution, General Motors Company (NYSE:GM) has a strong growth history and brand recognition that will help the company move further. Furthermore, the company has shown flexibility to the ever-changing demands of the customers.

Here’s what Oakmark Global Fund said about General Motors Company (NYSE:GM) in its Q1 2022 investor letter.

“General Motors (NYSE:GM) was a detractor during the quarter, due to increased macro uncertainty, higher fuel prices, and concerns over rising input costs, which pressured the company in particular and the auto industry as a whole. While we are closely monitoring the potential impact of these dynamics, industry demand remains robust, driven by strong consumer balance sheets and pent-up demand after multiple years of constrained production. We also remain confident in GM’s ability to navigate a complex operating environment, which the company has consistently demonstrated over the past few years. Finally, the long-term picture remains bright. We believe GM is significantly undervalued, is well-positioned for the long-term transition to electric vehicles and has numerous needle-moving ancillary business opportunities (most notably Cruise, which is an industry leader in autonomous vehicle technology) that are underappreciated.”