GM (GM) Stock Ready to Hit the Race Track?

Shares of GM (NYSE: GM) are moving higher for second day in a row. Yesterday the automaker reported an increase of 1.5 percent in September sales. Retail sales were a highlight, increasing 3 percent compared to fleet sales which were lower by 2 percent. The stock also received a prized endorsement from hedge fund guru David Einhorn. If that wasn't enough to make any GM investors giddy, GM also reported record monthly sales of the Chevy Volt.

GM critics are a dime a dozen, especially considering the politically charged atmosphere and President Obama’s support for an auto bailout. Spin aside, Einhorn and Obama are not the only two names who are bullish on company. Analysts at Deutsche Bank yesterday came out with a report on September U.S. auto sales and they are predicting upside for autos driven by pent up U.S. demand.

"We have been deliberately cautious about the sales trajectory given the potential for volatility around the election and the upcoming fiscal cliff. So far, this has not borne out," said analyst Rod Lache. "We underestimated the extent to which Automakers would be able to offer increasingly compelling deals with lower levels of subvention, as finance companies have become increasingly aggressive."

GM's retail pickup truck sales were roughly flat on a year-over-year basis, and this could be an encouraging sign. Lache is also encouraged that GM has shown significant pricing discipline in 2012 despite some large swings in market share and a very aged product portfolio. Historically, these factors may have driven aggressive pricing, but so far analyst haven’t seen signs this is happening.

GM has lagged the comeback in domestic auto sales this year, reporting a 3.2 percent increase in the first nine months compared to about 14 percent for the overall market. At 17.8 percent, GM's share of the U.S. market was frustrated by strong performance of the Japanese and Europeans. However, analysts project 18.2 percent share going forward. "This is reasonable given the large number of new model launches that are starting to hit the market," said Lache.

Deutsche Bank has a Buy rating on GM.

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