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General Motors (GM) to Invest $2.7B in Sao Paolo Factories

Zacks Equity Research

General Motors Company GM has made the announcement of investing $2.7 billion in two factories in Sao Paolo, Brazil, over the next five years, per Reuters. Per the governor of Sao Paolo in Brazil, this move by this auto giant is actually a U-turn as the plants in Sao Caetano do Sul and Sao Jose dos Campos were slated for closure in last December. This reversal of stance by the company saved 65,000 workers, who are directly and indirectly employed by it.

Carlos Zarlenga, General Motors’ CEO for South America stated that the company was incurring huge losses in Sao Paulo factories and it even warned employees. In order to fix the problem, an incentive plan was announced, which granted automakers a 25% reduction in value-added taxes for the creation of 400 jobs and investment of at least 1 billion reais. General Motors informed that it was creating 400 new jobs.

The company is increasing capacity investment in emerging markets to enhance global sales. It expects half of the global sales growth by 2030 to come from emerging markets. In fourth-quarter 2018, General Motors’ earnings and revenues surpassed their respective Zacks Consensus Estimate.

The company has an expected long-term growth rate of 8.9%. Over the past three months, its shares have outperformed the industry it belongs to. Over this period, shares of the company have increased 16% while the industry grew 4%.

General Motors currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the auto space are Ferrari N.V. RACE, Oshkosh Corp. OSK and Dana Incorporated DAN. While Ferrari currently sports a Zacks Rank #1 (Strong Buy), Oshkosh and Dana carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ferrari has an expected long-term growth rate of 18.5%. Over the past year, shares of the company have risen 6.6%.

Oshkosh has an expected long-term growth rate of 11.3%. Over the past three months, shares of the company have gained 27.6%.

Dana has an expected long-term growth rate of 4.4%. Over the past three months, shares of the company have risen 39.3%.

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