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GM stock speeds along
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January 11, 1999: 2:43 p.m. ET
Hits 52-week high on expected boost in pickup, small car profit margins
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NEW YORK (CNNfn) - Analyst enthusiasm about profitability at General Motors is causing the company's stock to step on the accelerator Monday.
GM shares were up 5-7/8 to 85-15/16 in afternoon trading. The stock has traded as high as 87-1/4, a 52-week high for the No. 1 automaker.
Among the keys to the advance is the company's meeting last Friday with analysts at which executives said a new pickup truck line will be more profitable than older lines.
"The company went through some detailed financial disclosures about the changeover, which I thought could add about 50 cents a share in earnings," says David Garrity, a principal at GVA Research in New York who follows the company closely.
Garrity also believes GM's (GM) newly announced Yellowstone program to increase the profitability of its small cars is spurring investors.
"The small car programs have traditionally been among the least profitable," he says. "Now, they've brought in Mark Hogan (as head of small car operations), who used to head GM production in Brazil, where GM actually makes money on small cars."
Garrity also sees a rise in the Japanese yen, which could reduce the attractiveness of Japanese cars to U.S. consumers, and the run up in Internet stocks as reasons investors are turning the ignition key at GM.
"There's a valuation disparity between Internet stocks and cyclical stocks such as GM, which are inexpensive, especially given the fact that we still have a fairly strong economy," he says.
Also weighing on GM Monday is evidence that the company and the United Auto Workers may be over the rancor that resulted from last summer's strike.
GM said Monday fourth-quarter production was the best it has been in a decade. The company built 1,510,000 cars and trucks in the October-December period, 15,000 more than originally estimated.
"We stretched our systems, ourselves and our supplies, and everyone involved came through to get more new GM cars and trucks to our customers than we thought we would," says Nick Matich, the executive in charge of North American production control and logistics.
For all 1998, GM production fell to 5,059,000 vehicles from 5,628,000 in 1997, due mostly to the strike.
J.P. Morgan has raised its 1999 price target for GM stock to $95 a share from $90, and boosted its 1999 earnings estimates for the company to $8.75 a share from $8.40.
The firm says favorable cost and margin trends have company executives optimistic that GM can deliver on its $4 billion earnings target for its North American auto operations.
If GM can do that, obtain better international results, and successfully spin off its Hughes subsidiary, Morgan says the stock's price could reach as high as $145 a share in the next 12 months. 
-- from staff and wire reports
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General Motors
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