10 Best Automotive Stocks To Buy Now

3. Carvana Co. (NYSE:CVNA)

Number of Hedge Fund Holders: 61

Carvana Co. (NYSE:CVNA) is an automotive retail company that operates an e-commerce platform for buying and selling used cars in the US. It is based in Tempe, Arizona.

A lot of investors may be wondering why Carvana Co. (NYSE:CVNA) is on this list, seeing as its retail sales growth has been slowing. However, a closer look at the company’s growth trajectory shows that previously, the company was expanding too fast and too expensively. The pullback on retail sales growth is actually a strategy that Carvana Co. (NYSE:CVNA) is employing to focus all efforts on more profitable sales – a strategy that has yielded impressive results. Carvana Co.’s (NYSE:CVNA) Gross Profit Per Unit (GPU) has actually been rising as a result of this strategy. In 2023, its GPU came in at $5,500, which was a new record for the company and was about $1000 higher than its previous record in 2021.

Carvana Co. (NYSE:CVNA) has also been working on cutting expenses, with 2024 marking the year when it was able to cut over $1.1 billion of its annualized Selling, General, and Administrative expenses. The company has also been working on improving its liquidity by restructuring its debt, through which it has saved about $430 million in annual interest expense. In the first quarter, Carvana Co. (NYSE:CVNA) also delivered the best results in its history, with net income coming in at $49 million, in stark contrast to the $286 million loss of last year. Overall, now seems like a good time to invest in Carvana Co. (NYSE:CVNA) as it’s really turning things around for itself at a fast pace.

There were 61 hedge funds long Carvana Co. (NYSE:CVNA) in the second quarter, with a total stake value of $5.1 billion.