TheStreet.com's Jim Cramer sees good reason to own the automaker's stock now that a big raw cost has been reduced.
General Motors (NYSE: GM) (Cramer's Take) got what it wanted.
It reduced the largest component of a car's cost -- health care -- to something that is a lot more like what the other guys, its rivals, have.
To me this is crucial because right now, with the Fed cutting interest rates, you should have been buying these auto stocks. But the raw inputs -- namely, health care -- were too high.
No longer.
Currently the earnings per share estimates for GM for next year are in the $3s, some high $3 and some low $3.
You just got a huge boost to those numbers from the bottom-line side. I think the Fed's rate cuts are going to help the top line because the auto companies can then offer the cut-rate financing that brings people into the showroom.
I would buy this stock off this deal if the stock stays around current prices because the possibility of a 4 handle on the earnings makes it worth the taking.
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in any of the stocks mentioned in this post.











Reader Comments (Page 1 of 1)
9-26-2007 @ 9:21AM
MTfunds said...
As usual let's help the big corporations as Americans live like 3rd world citizens. It's all about the money and no one cares about the workers anymore. Bottom line is it's all about the bottom line. China and Dubai are the new world leaders, Russia and Europe like them too. We're sunk. The wealthy are diversified and have global investments. The American worker will just have to suffer, too bad. That's it.
9-26-2007 @ 11:08AM
qafguy4u said...
I make $13.00 an hour and pay my own health insurance. Auto workers make $30 an hour and pay little in health insurance. Who do you feel sorry for. There are minimum wage earners w/ families who I am sure would like to make $30 an hour. Reality Check Please
9-26-2007 @ 11:20AM
Don Clou said...
Bad news is that auto, appliance, and all other durable goods dealers have been offering 0% financing deals since before the rate cut. They have also been offering cash back incentives in addition to 0%. Cutting rates more will not help; it will only send the economy into a deeper recession, maybe a depression.
9-26-2007 @ 11:25AM
Don Clou said...
The consumer will not take on any more debt no matter what the interest rate is being offered at-not even 0%.
9-26-2007 @ 11:36AM
Don Clou said...
Only by giving all consumers a tax reduction by doubling or tripling the personal exemption and standard deduction rates can the economy be saved. Supply side tax cuts have failed. We must have a consummer tax cut to achieve sustainable economic growth.
9-26-2007 @ 1:03PM
Julie said...
Hello, what is Jim Cramer's opinion on WFMI & CAJT?
9-26-2007 @ 12:39PM
sarai said...
screw you lets see how you do if you find out that you lost med coverage because some made a bad investment with the fund that was paying for your med coverage
9-26-2007 @ 1:37PM
JOE CRISCIONE SR said...
IT'S A SHAME THAT THIS COUNTRY HAS TO SEND IT"S MAJOR INDUSTRY OVERSEAS, BECAUSE OUR GOVT CAN'T PROVIDE HEALTH INSURANCE, STOP PAYING THOSE BIG PERKS TO GM EXECS, STOP THE GUNPOWDER FLOW TO IRAQ, AND GET OUR COUNTRY BACK TO WHAT IT USED TO BE. SAVE AMERICA, DON'T DESTROY IT.
9-26-2007 @ 1:36PM
Hen How said...
wah...Dubai and China are better then US...I'm going to cry, and all of you filthy rich people can watch me....wahhhahhah sob sob sob...don't you feel sorry for me?...wha hahhw
9-26-2007 @ 2:25PM
Pat Kelley said...
GM AND FORD AND CHRYSLER SHOULD BE DOING WELL ! Years ago escaltion clauses (COLA) Is what sent Our auot makers into tail spin . Health care is like BRK.A shs too expensive ! We should demand a roll back in Health insurance costs ! But until we get honest elected politicians ! We wont . Vote your wallets . Never Vote for someone who says I'll cut your taxes ! It will be your wages .
Patrick L Kelley
9-26-2007 @ 3:59PM
George Lee said...
GAFGUY4U. Thats why you should join a union as they are the only people who will help to get better pay & benefits,the union tries to help people like you by getting you to sign up for a union. Unfortunately people in this country are so brainwashed against unions its hard to get new members to join.People like you Gafguy4u are only anti union because you a jealous. If you had any common sense you would find a better union represented job.
9-26-2007 @ 4:03PM
Van said...
GM/UAW will put the company back on track as the #1 automaker...Toyota/Honda will now tell their workers that their wages will be frozen..This ought to be interesting since they have record sales. GM stock will now double by the end of the year....
9-27-2007 @ 9:11PM
Jerry Sombati said...
ah look like ALL american workers including you anti-union workers and the southern hillbillies auto workers wont get ANY raises, ah too bad
9-26-2007 @ 9:49PM
linda said...
I am wondering if the car prices will really go down for the buyer, now that healthcare& pension will not be a cost added onto the sale. I will be checking the dealerships to see.
I feel if the car industries build smaller, cost saving vehicles they would get more sales. Most in the USA do not have the income to afford the big & expensives vehicles they all build now. Just a thought.
9-26-2007 @ 9:56PM
jerry mcdonald said...
the UAW-GM agreement was a sucker play, for GM.The UAW has done nothing for you, but cost you,your families, and retirees a lot of money.Nobody, with half a brain, would join the UAW!It cost the international union nothing,you didn't get strike pay,unless off 3 days.Big show,all blow.Thanks for screwing the retirees who made it possible for you to us.Cramer-eat it
9-27-2007 @ 8:56AM
chas. davie said...
Join a UNION! Corporations have there union they call it the board room. They have a organized common goal. If labor is not organized they do not have a orderly, structured goal. If you believe you deserve more than 13.00 p/h tou can't just show up at do your time and go home. You have to do hard work. If UNIONS where not the fare answer why does corporations spend so much money to stop it? UNION wages/benifts where not GIVEN!!!
9-27-2007 @ 7:00PM
Star said...
I saw you on Hardball bawling about how we need to break the unions. The unions are 10% of workers now-more's the pity. Time for a good class war!
10-01-2007 @ 2:21PM
Van said...
All of you whinning asses out there that bad mouth the Unions will find out that the UAW has done something with their medical coverage that the rest of the country will follow. So numb-nuts like Jerry Mcdonald (above) will have to eat crow on this one.