Five used car stocks to consider amid a red-hot auto market - Kalkine Media

June 29, 2021 12:38 PM PDT | By Team Kalkine Media
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  • Group 1 Automotive (NYSE: GPI) stock rose 134% in the past year with revenue and net income growth.
  • Carvana Co. (NYSE: CVNA) retail sales jumped 76.4% in the March quarter. The stock raked in 154% growth in the past year.
  • Lithia & Driveway (NYSE: LAD) to acquire Toyota store in Washington. Its share price rose by 119% in the past year.

The used car market is picking up again in the US after a pandemic-related slowdown. However, the automotive industry has witnessed a turbulent period over the past few months, from a covid-induced drop in demand to semiconductor shortages, forcing several major auto companies to close operations or reschedule their production timeline temporarily.

Meanwhile, electric vehicles (EVs) have been the “apple of the eye” for investors as net-zero emission targets became the government’s focus. The policy emphasizes replacing the existing combustion engines with pollution-free renewable energy-powered vehicles.

However, the covid pandemic has come as a boon to the sector of late as people are increasingly avoiding public transport and preferring private conveyance. But, unfortunately, a new variant of Covid-19 called Delta is adding to their woes.

We explore here five used car stocks that may benefit from the emerging developments.

Group 1 Automotive, Inc. (NYSE: GPI) is an operator in the automotive retail industry and based in Houston, Texas. GPI sells new and used cars, light trucks, auto parts and provides maintenance and repair services, vehicle finance, and insurance through its dealers. 

Its market capitalization is US$ 2.78 billion. Its P/E ratio is 7.89.

There were 118 dealerships in the US as of March 31, 2021, and 49 and 16 dealerships in UK and Brazil, respectively. Its operations are in 15 states in the United States, 33 towns in the UK, and three states in Brazil.

Its digital platform AcceleRide, installed in all the dealerships in 2019, can be used by buyers to explore, get finance and insurance, and sellers can use it to initiate the sale and later complete the transaction at one of the dealerships.  

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In the first quarter of 2021, its total online retail sales increased by 124% compared to the corresponding period of the previous year. It reported total revenue increased by 11.9% year over year from US$2.69 billion to US$ 3.01 billion YoY.

Its net income was US$101.9 million for the March quarter of 2021 compared to US$29.8 million for the same period in 2020. Its used vehicle retail sales were 38,059 units in the three months ended March 31, reflecting an increase of 3.4% year over year.

The stock price rose 134% in the past year. It closed at US$153.09 on June 28, 2021.

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Source: Pixabay

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Carvana Co. (NYSE: CVNA) is a Tempe, Arizona-based e-commerce platform for used car sales and purchases. It listed 32,800 total units on its website as of March 31, 2021. Its website can be used from mobile or desktops.

Its market capitalization is US$ 52.66 billion.

Used vehicles make for the largest part of CVNA’s revenue. It was US$ 1.8 billion and US$ 964 million in the March quarter of 2021 and 2020, respectively.

It booked a net loss of US$36 million, attributable to shareholders, in the March quarter of 2021, a 55% decrease YoY, from US$184 million.

During the three months ended March 31, 2021, 92,457 retail units were sold compared to 52,427 in 2020 for the same duration, reflecting a 76.4% climb. Its stock price raked in 154% growth in the last year and closed at US$305.47 on June 28, 2021.

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Penske Automotive Group, Inc. (NYSE: PAG) is a Bloomfield Hills, Michigan based diversified transportation service company. Its P/E ratio is 8.86, and market capitalization is US$6 billion.

PAG changed its name in 2007; earlier, it was called United Auto Group. It reported 304 retail automotive franchises as of March 31, 2021, of which 143 and 161 franchises were in and outside the United States, respectively.

The US and Puerto Rico generated 58% of the company's revenue in the March quarter of 2021, while 42% came from outside the US.

It generated 73% of its total retail automotive dealership revenue from premium branches such as Porsche, BMW, Mercedes-Benz, Audi, and Land Rover.

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Its total revenue for the March quarter was US$ 5.77 billion, a 5% increase year over year.

Net income for the same quarter in 2021 was reported at US$182.5 million compared to US$51.7 million in the March quarter of 2020, showing a growth of 253% year over year.

Its share climbed nearly 93% in the last year at the closing price of US$ 74.26 as of June 28, 2021.

Source: Pixabay

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Lithia Motors, Inc. (NYSE: LAD)
provides personal transportation services. It is one of the fastest-growing Fortune 500 companies, with operations in 22 US states on March 31, 2021.

LAD’s market capitalization is US$ 10.27 billion, and the P/E ratio is 14.63.

The company’s total revenue was US$ 4.34 billion in the quarter ended March 31, 2021, reflecting nearly 55% growth year over year. Used vehicle retail and wholesale increased 58% year over year.

Its net income for the March quarter was US$ 156.2 million compared to US$ 46.2 million in the previous year corresponding quarter.

Today, Lithia & Driveway (LAD) announced to acquire Toyota store in Washington with an expectation to add US$ 235 million in annualized revenue.

Its share price rose 119% in the last year at the close of US$335.36 on June 28, 2021.

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AutoNation, Inc. (NYSE: AN) is an automotive retailer and offers new and used vehicle sale and purchase services through its subsidiaries.

Its market capitalization is US$7.54 billion, and its P/E ratio is 9.55.

In the March quarter of 2021, it operated 315 new vehicle franchises from 230 stores in the US. It also owned and operated 73 AutoNation-branded collision centers.

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It also owned and operated 73 AutoNation-branded collision centers.

Its revenue for the March quarter was US$5.9 billion and net income of US$239.4 million compared to US$4.67 billion revenue and a net loss of US$232.3 million in the corresponding quarter in 2020. Its stock soared approximately 149% in the past 12 months. Its closing price was US$93.6 on June 28, 2021.

Please note: The above constitutes a preliminary view, and any interest in stocks/cryptocurrencies should be evaluated further from an investment point of view.


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