Looking for Growth Stocks? 3 Reasons Why General Motors (GM) Is ​​a Solid Choice

Growth stocks are attractive to many investors as above-average financial growth helps these stocks easily capture the market’s attention and deliver outstanding returns. But finding a great growth stock is not easy.

These stocks inherently carry above-average risk as well as volatility. Additionally, losses may be incurred from a stock whose growth story has ended or is nearing its end.

However, it’s fairly easy to find the latest growth stocks with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond traditional growth characteristics to analyze a company’s true growth prospects.

General Motors (GM) is currently on the list of stocks recommended by our proprietary system. In addition to a positive Growth Score, it carries a top Zacks Rank.

Research shows that stocks with the best growth characteristics consistently outperform the market. Returns are even better for stocks with a combination of Growth Scores of A or B and Zacks Rank #1 (Strong Buy) or 2 (Buy).

Here are the three most important factors that make shares of this automaker a great growth option right now.

Earnings growth is arguably the most important factor, as stocks that exhibit exceptionally rising profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is definitely preferable and is often an indicator of strong prospects (and stock price gains) for the company in question.

While General Motors’ historical EPS growth rate is 23%, investors should actually focus on projected growth. The company’s EPS is expected to grow 33% this year, exceeding the industry average of 1% EPS growth.

Growth investors often ignore the asset utilization ratio, also known as the ratio of sales to total assets (S/TA), but it is an important characteristic of a true growth stock. This metric shows how efficiently a firm uses its assets to generate sales.

Currently, General Motors’ S/TA ratio is 0.65, meaning the company generates $0.65 in sales for every dollar of assets. Comparing this with the industry average of 0.42, it can be said that the company is more efficient.

While the level of efficiency in sales generation is very important, a company’s sales growth is also very important. General Motors is also in a good position for sales growth. The company’s sales are expected to grow 4.4% this year, compared to the industry average of 0%.

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