10 Best Used Car Stocks To Buy According to Hedge Funds

6. Lithia Motors Inc. (NYSE:LAD)

Number of Hedge Fund Investors: 35

Lithia Motors Inc. (NYSE:LAD) is a leading automotive dealership group in the US. It operates 299 locations across the US, 15 locations in Canada, and 155 locations in the UK. The company offers a wide range of products and services throughout the vehicle ownership lifecycle, including new and used vehicle sales, financing solutions, and efficient auto repair services. The company provides simple, transparent, and convenient experiences through both physical dealerships and e-commerce platforms.

Despite challenges from the CDK outage, the company has shown strong performance in Q2 2024, with revenues reaching $9.2 billion, a 14% increase year-over-year. Lithia Motors Inc. (NYSE:LAD) also reported profitability in its financing operations, which turned around from a loss of $18.7 million in Q2 2023 to an income of $7.2 million in Q2 2024.

Lithia Motors Inc. (NYSE:LAD) continues to strengthen its business through strategic acquisitions, which have become a core competency for the company. During the second quarter, Lithia welcomed two stores from the Sunrise Group in Tennessee and a Woodbridge Hyundai store in Toronto. On September 10, Lithia Motors Inc. (NYSE:LAD) announced the acquisition of three dealerships from Duval Motor Company in Florida, projected to generate over $200 million in annual revenue.

The company has managed to grow its top line at a compound annual growth rate (CAGR) of 22.61% over the past ten years, while its bottom line has increased at a CAGR of 21.50% during the same period.

This combination of revenue growth, strategic expansion, and a resilient business model makes Lithia Motors Inc. (NYSE:LAD) an attractive stock. Additionally, LAD can be considered cheap at current levels. The stock is trading at only 11 times its forward earnings, a 35% discount to its sector median.

According to Insider Monkey’s database, 35 hedge funds held stakes in Lithia Motors Inc. (NYSE:LAD) in the second quarter of 2024. This brings LAD to the 6th spot on our list of the best used car stocks to buy according to hedge funds.