One of the three major credit rating agencies raised its outlook Tuesday for General Motors from stable to positive on expectations that profit margins remain strong and debt is low.

Fitch Ratings is keeping its rating for GM and General Motors Financial at BBB-. In a report issued by its primary analyst Stephen Brown, Fitch cited the settlements over the past year of the fines, lawsuits and other liabilities related to the recall of nearly 2.6 million small cars from model years 2003 through 2007 that were equipped with defective ignition switches.

GM is in the midst of a $9-billion buyback of its own stock, but has told investors it should be able to maintain cash reserves of about $20 billion over the foreseeable future.

“Over the intermediate term, Fitch expects free cash flow to grow substantially on higher global production volumes and increased operational efficiency,” the report stated. “GM remains one of the most globally diversified auto manufacturers, with strong positions in most major and emerging auto markets, which helps to protect it from region-specific weakness.”

Today, most of GM’s profits are coming from North America, where new vehicle sales are running at record levels. It also is profitable in Asia, especially China, and is on track to make a modest profit in Europe this year for the first time since 1999. South America is currently its only unprofitable region.

GM’s stock price has not benefited from its recent string of robust profitable quarters, mostly because investors remain convinced that the North American auto market is at or near the peak of an economic cycle and they are less convinced that its operations in the rest of the world will compensate fully for any decline in North American profits over the coming years.

GM shares closed Tuesday at $28.83, down 25 cents, and more than $4 below the $33 price of its initial public offering in November 2010.

Fitch’s analyst Brown is slightly more optimistic.

“In a downturn, we expect¬†that GM would experience a significant cash outflow due to its inherent operating leverage, working capital profile and capital expenditure needs,” the report states.

But cash of about $20 billion and a borrowing capacity of about $14 billion, mostly through revolving lines of credit, should be ample to¬†provide “sufficient financial flexibility to withstand a severe decline in demand.”

The credit rating agency also gave a vote of confidence to GM’s recent moves positioning itself for a future where ride-sharing, car-sharing and autonomous vehicles could change how vehicles are used and sold. These include spending $500 million for a 9% stake in ride-sharing service Lyft and the acquisition of San Francisco-based Cruise Automation for a reported price of $1 billion. Cruise, Lyft and GM are testing a small fleet of Chevrolet Bolt EVs in the Bay Area that are equipped with Cruise’s technology that can take some control of steering, braking and accelerating from a human driver.

“Although most of GM’s technology and mobility initiatives are unlikely to have a material impact on the company’s financial performance for at least several years, Fitch views GM’s investments in these areas positively and believes the company is well positioned to compete if new technologies alter personal transportation over the next decade,” the report stated.

Contact Greg Gardner: 313-222-8762 or ggardner@freepress.com. Follow him on Twitter @GregGardner12