My Top Two Stocks: General Motors Company (GM) and Ford Motor Company (F)

But as I said, the jury is still out on whether buying General Motors Company (NYSE:GM) was a good move or not. My thesis was pretty simple: If GM followed in Ford’s footsteps by improving quality, reducing costs, and streamlining its global model lineup, it had massive potential upside.

Unfortunately for my investment, General Motors Company (NYSE:GM)’s renaissance has been less convincing than Ford Motor Company (NYSE:F)’s – at least, so far. While the “One Ford” approach has made Ford’s North American division tremendously profitable, and is being used as a template to restructure its European branch, GM’s approach has been more muddled, and its profits less impressive.

That said, GM is in the midst of a major product-line overhaul that could well lead to big gains. Some of its latest models, like the Cadillac ATS sedan, are seriously good vehicles – though others, like its new pickups, are still arguably too conservative. Still, as GM rationalizes its global product line and rolls out more fresh products over the next few years, its competitiveness – and margins — should see significant improvement.

So would I buy either of them now?
I absolutely think that Ford is still a buy. As strong as its North American business has been in recent quarters, Ford Motor Company (NYSE:F) looks set for significant upside as its European restructuring and a major expansion effort in Asia look set to generate substantial bottom-line gains by mid-decade.

General Motors Company (NYSE:GM) is likely to be a wilder ride, though I think the potential upside from here may be even greater than Ford’s: Simply put, GM is a bigger company, with more things remaining to be fixed. While doubts persist about CEO Dan Akerson, an industry outsider who joined GM’s board in the wake of its government-brokered high-speed bankruptcy in 2009, he has a strong executive bench behind him – and as noted above, some of GM’s latest products show that the company can compete with anybody.

So to answer the question: Yes, I’d buy GM now. But I think it’s an investment that will require patience and close watching, and a willingness to hang on for what could be a bumpy ride over the next couple of years.

The article My Top Two Stocks: GM and Ford originally appeared on Fool.com and is written by John Rosevear.

Fool contributor John Rosevear owns shares of all of the stocks mentioned in this article. Follow him on Twitter at @jrosevear. The Motley Fool recommends Diageo, Ford, and General Motors. The Motley Fool owns shares of Ford.

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