Why Would Anyone Buy Shares in GM?

Barron’s Magazine has a cover story this week about how investors should be buying GM, which is at 26-year lows. The reasoning is that through the cost-cutting and re-tooling, the stock could double or triple in the next few years.

My response to that?

Yawn.

Why, in heavens name, would you want to own a company that is doing nothing but losing money? Even if you might triple your money in the next three to five years?

Forget the car companies. Buy industries that are making gobs of cash. One of those industries right now is the fertilizers.

How much money will they make? We got a peek when small fertilizer company Intrepid Potash (IPI) reported earnings today.

The numbers from Reuters:

-Net income rose 417% to $33.1 million from $6.4 million a year earlier.

-On a pro forma basis, earnings increased to 27 cents a share from 5 cents.

THOSE are earnings. Forget GM.

I’m not endorsing Intrepid Potash, which is trading around 120 times earnings (even with this increase in earnings.) The stock is overpriced.

But other, larger, fertilizer companies are going to see sharp rises in earnings as well. CF Holdings (CF) is trading around 16 times earnings. Potash of Saskatchewan (POT) around 20 times earnings. Potash is one of the largest potash fertilizer companies in the world.

As an owner, which is what you are when you’re a shareholder, do you want to own a company that is making gobs of money or one that is losing gobs of money?

That’s what I thought.

Again, forget GM. There are much better companies to invest in out there.

Sorry Barron’s.

(In full disclosure, the author of this article owns shares of Potash (POT) but none of GM.)