Why shares of these two old automakers are on fire

Shares of two of the oldest automakers around have run over the S&P 500 in the past month as each unveiled detailed plans to take on electric vehicle king Tesla (TSLA).

Over the last month, shares of Ford (F) and General Motors (GM) have each gained about 15.5%, according to Yahoo Finance Plus data. The S&P 500 has returned a more pedestrian 4.5% as investors fret about the debt ceiling, inflation, climbing 10-year yields and a legion of other headline risks.

Ford's stock has trounced GM in the year-to-date battle (Ford is up 31% vs. GM, up 16%), but the latter has seen its stock perk up this week (finally) after executives further pulled back the tarp on an EV product and financial roadmap.

General Motors told investors at a two-day meeting in Detroit this week it aims to double sales by 2030 amid a flurry of new EV models. The company believes it could take its operating profit margin to a range of 12% to 14%, from 7.9% last year.

Meanwhile, GM said it would debut an all-electric Silverado pickup truck at the Consumer Electronics Show (CES) in January, and boost sales from software services in coming years.

The news out of GM sent the stock up 6% in Thursday's session.

Wedbush analyst Dan Ives, who attended the meeting, told Yahoo Finance, GM "came out swinging" this week, and was impressed by the tone at the event.

But not everyone on the Street who trucked on over to GM's big EV party was convinced.

"GM’s target of a doubling of revenues and 12[%] to 14% margins by 2030 imply roughly $30 of EPS and $50 billion of EBITDA. The stock today trades at roughly 1.5x PE and 1x EBITDA on these targets. Even discounted for time value, the market appears to be ascribing an extremely low probability these targets are achieved," explained auto analyst Adam Jonas at Morgan Stanley.

Jonas added, "Overall, we were left with a sense of great capability at the company but still many unanswered questions regarding execution. While so many company targets tend to be back-end loaded, we believe the next 12 months will prove critical for setting the strategic course for GM’s future."

As for Ford, it's probably having the more impressive past month or so.

The Detroit-based auto giant said last week it will partner with SK Innovation to invest $11.4 billion to construct two "mega-sites" — one in Tennessee and the other in Kentucky — that will build electric trucks and batteries. Ford's portion of the investment — $7 billion — is the largest manufacturing investment in the company's 118-year-old history.

Ford will construct Blue Oval City in Stanton, Tennessee, the site will aid in building an "expanded" electric-truck lineup. Currently, Ford has released the all-electric SUV called the Mach-E and soon will begin producing the all-electric F-150 Lightning. The 3,600-acre campus will cover nearly 6 square miles, at a total of $5.6 billion. It's expected to create 6,000 jobs.

No less impressive is the other mega-campus slated to open in Glendale, Kentucky. Dubbed BlueOvalSK Battery Park, it will be a dedicated battery manufacturing complex for Ford's expanding roster of electric vehicles. The 1,500-acre site will cost $5.8 billion to build and create 5,000 jobs. The location is targeted to open in 2025.

Ford CEO Jim Farley told Yahoo Finance Live the investment is akin to planting a major flag in the ground in its efforts to lead the EV market.

"In our view, this new production capacity for batteries and battery electric vehicles underscores that Ford is building the needed foundation in terms of platforms and battery capacity to be a winner in the EV market," said Barclays analyst Brian Johnson.

Johnson reiterated an Overweight (Buy) rating on Ford's stock with a $17 price target.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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