A TSX-listed stock to buy as used car prices rise in Canada

Highlights 

  • In Canada, the average price of a used vehicle increased to C$ 31,875, representing an increase of 27 per cent year-over-year (YoY).
  • The global shortage of chips doesn't seem to end soon, and it is reportedly causing a demand surge for used cars.
  • E Automotive Inc. is a digital car auction platform and provides automotive dealer solutions.

The global shortage of chips doesn't seem to end soon, and it is reportedly causing a demand surge for used cars in Canada. 

The shortage crisis that began last year during the pandemic has not returned to normal levels, forcing companies to manufacture the cars in lesser numbers. 

According to reports, the prices of used cars is increasing due to the microchip shortage, and as there's a long waiting time for new vehicles, customers are showing interest in buying the old cars. 

Canada's inflation rate surged to the highest in 18 years in October and made almost everything expensive ever since then. However, the price hike in the used cars industry is reportedly severe. 

The country's largest online seller of used cars- AutoTrader.ca, claims that the average price of a used vehicle increased to C$ 31,875, representing an increase of 27 per cent year-over-year (YoY). 

This is reportedly for the first time when the mean price of a used vehicle has crossed the C$ 30,000-mark. 

That said, let's look at a recently listed stock on the Toronto Stock Exchange

Why E Automotive Inc. (TSX:EINC) should be on your watchlist?

E Automotive Inc. is a digital car auction platform and provides automotive dealer solutions. 

The Toronto-based company could benefit from the global chip shortage as people are expected to concentrate on the used cars market.

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E Automotive's retail platform allows clients to track vehicle inventory and offer products through digital showrooms. In addition, the company also provides advertising software tools and digital retailing services.

Also Read: Avis Budget (CAR) soars 108% on Q3 revenue surge! An auto stock to buy?

At the end of the trading session on Friday, December 3, the EINC stock was priced at C$ 17.5 per share. 

Bottom line

In the third quarter of this year, E Automotive's revenue soared to US$ 19.8 million, up by 108 per cent YoY due to the completion of three acquisitions and 55 per cent organic growth.

Meanwhile, the gross transaction value of the company increased by 129 per cent from Q3 2020 to US$ 538.4 million in Q3 2021. 

Notably, the number of vehicles transacted through E Automotive's platform was 41,970, up 84 per cent YoY.

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