General Motors Is An ESG Play Now

(Bloomberg) -- It’s been years since General Motors Co. was the world’s largest automaker. But it may have a new size and scope: Environmentalists’ favorite.

“GM has found a new life as an ESG play,” Christopher Marangi, Gamco’s value co-chief investment officer, said Tuesday on Bloomberg TV’s Surveillance. “We do have a sustainability fund that owns it in part because of their commitment to electrification. Mary Barra has been pretty vocal about that obviously, and it looks like it’s for real,” he said, referring to GM’s head. 

The automaker’s shares have returned almost 30% this year, about double the S&P 500 and its automobiles and components sub-index.

“The stock is cheap,” Marangi said. GM’s estimated price-to-earnings ratio is around 8.1 compared with 20 for the S&P 500, according to data compiled by Bloomberg.

“I don’t think there’s any question companies with good ESG (environmental, social and governance) reputations, good ESG scores, have attracted capital, and in many cases have garnered valuation premiums,” Marangi said. “There are certain requirements that have to be met. GM, believe it or not, it fits that.” 
 

“They are really investing in products to compete with Tesla and others, and I think they are going to be successful,” Marangi said. 

He warned that GM “will never escape” its prominence as a cyclical stock, “but the cycle probably is in its favor for the next five years.”

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