Stocks pairs trading: GM vs TSLA
Analyzing the financial metrics and market dynamics of General Motors (GM) and Tesla (TSLA) offers valuable insights for investors weighing their options.
Reasons to Consider Buying GM Over TSLA:
P/E Ratio: GM's P/E ratio of 4.99 is significantly lower than TSLA's 68.33. This suggests that GM might be relatively undervalued, presenting a more attractive investment opportunity based on earnings.
Market Capitalization and Sales: GM, with a market cap of 48.63B and sales of 171.97B, shows a robust business scale. TSLA, despite a higher market cap of 674.54B, has lower sales at 95.92B, indicating GM's stronger market penetration in the automotive industry.
Volatility and Beta: GM's beta of 1.50 suggests lower volatility compared to TSLA's higher beta of 2.45. This might make GM a more stable investment choice for risk-averse investors.
Reasons to Consider Selling TSLA Over GM:
Lack of Dividends: TSLA's lack of dividend payments could be a drawback for investors seeking regular income from their investments.
Recent Performance: TSLA's recent performance shows declines over various time frames (week, month, quarter), which might indicate short-term volatility or market skepticism.
Decision:
Buy 6 GM: Given its lower P/E ratio, steady profit margin, and strong sales figures, GM emerges as a potentially more stable and value-oriented investment
Sell 1 TSLA: Despite TSLA's innovative leadership and growth potential in the electric vehicle market, its high valuation, lack of dividends, and recent market performance suggest it might be a riskier choice compared to GM
Reasons to Consider Buying GM Over TSLA:
P/E Ratio: GM's P/E ratio of 4.99 is significantly lower than TSLA's 68.33. This suggests that GM might be relatively undervalued, presenting a more attractive investment opportunity based on earnings.
Market Capitalization and Sales: GM, with a market cap of 48.63B and sales of 171.97B, shows a robust business scale. TSLA, despite a higher market cap of 674.54B, has lower sales at 95.92B, indicating GM's stronger market penetration in the automotive industry.
Volatility and Beta: GM's beta of 1.50 suggests lower volatility compared to TSLA's higher beta of 2.45. This might make GM a more stable investment choice for risk-averse investors.
Reasons to Consider Selling TSLA Over GM:
Lack of Dividends: TSLA's lack of dividend payments could be a drawback for investors seeking regular income from their investments.
Recent Performance: TSLA's recent performance shows declines over various time frames (week, month, quarter), which might indicate short-term volatility or market skepticism.
Decision:
Buy 6 GM: Given its lower P/E ratio, steady profit margin, and strong sales figures, GM emerges as a potentially more stable and value-oriented investment
Sell 1 TSLA: Despite TSLA's innovative leadership and growth potential in the electric vehicle market, its high valuation, lack of dividends, and recent market performance suggest it might be a riskier choice compared to GM
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