GMIt was a surprise, in a good way: General Motors (GM) said Thursday that its second-quarter profits had nearly doubled, with revenues soaring on improved margins and strong sales around the world.

There were no gimmicks in these numbers. Plain and simple, these are solid results following on good execution. GM's profit of $2.5 billion, or $1.54 a share, was well ahead of the $1.20 a share expected by Wall Street analysts. Revenues were up 19% to $39.4 billion, an impressive result driven by -- for the first time in years -- profits from all four of GM's global regions.

So why did the stock, already hovering near a post-IPO low, drop even further on the news?

The Problem of Perception

The broader market sell-off had a lot to do with Thursday's drop, but Wall Street has been turning its nose up at GM stock for months now. At around $27 a share, the stock is a long way from the high $30s seen earlier in the year, though the company looks stronger today than it did then.

Still, Wall Street is having trouble shaking its old opinions about GM. While the U.S. government still holds a big chunk of GM shares, the post-bankruptcy GM is a very different beast from the foundering giant that Americans knew and mostly didn't love prior to its 2009 collapse. After decades of financial mismanagement, it may surprise casual observers to learn that today's GM has what it calls a "fortress balance sheet": a cash hoard of more than $33 billion -- and minimal debt.

World-Class Cars, For Real?

Here's another thing many have missed: GM finally has some products that -- no fooling -- can compete with anybody. It's true that GM's product line remains spotty, with class-leading entries sharing showroom space with models that really should have been replaced years ago. GM wasn't able to invest heavily in new products during the run-up to the economic crisis, and that has left it scrambling to catch up to the rivals that could -- most notably, Ford (F) and Hyundai (OTC: HYMTF).

But its best new products are really, really good -- good enough to command premium prices, without the sales incentives that have crushed Detroit's profits for years. The Chevy Cruze compact, a well-executed model with an upscale-feeling interior, shows particularly well against the Asian competition, and GM sold more than 60,000 of them during the quarter. So far in 2011, it's the second-best-selling compact in the U.S., according to Edmunds.

That number was no doubt helped by shortages of popular models from earthquake-ravaged Toyota (TM) and Honda (HMC), but it's still a tremendous result for GM in a category where it has historically fielded also-rans.

Lots of new products will arrive over the next few years as the company invests huge resources in development to make up for lost time. Every few days seems to bring another announcement of an investment in an upcoming model -- two new Cadillac sedans were announced Thursday, along with a new fuel-efficient powertrain for Buick -- though, to be fair, many critical vehicles remain months or years away.

While new products are key to any automaker's success, there's more to GM's turnaround. GM's long-troubled European division showed a profit this quarter for the first time in ages, and the company's efforts in China remain a shining -- and surprising -- success story.

A Surprisingly Cheap Stock

Challenges lie ahead, including an economy that may be turning back down and a coming resurgence from Toyota, which is determined to regain lost sales ground in the U.S. But GM -- today's GM, right now -- is making big bucks despite fierce global competition and an industry sales rate that is still far below pre-2008 levels. That, and the $33 billion GM has in the bank, gives me confidence that this iteration of General Motors should be able to comfortably weather any downturn.

But for all that, this iconic company's market cap is still just a few billion more than its cash hoard. And that leads me to wonder: When will Wall Street catch on to this story?

At the time of publication, Motley Fool contributor John Rosevear owned shares of General Motors and Ford.


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