10 Best Used Car Stocks To Buy According to Hedge Funds

5. CarMax Inc. (NYSE:KMX)

Number of Hedge Fund Investors: 35

CarMax Inc. (NYSE:KMX) is a leading retailer of used vehicles in the US with more than 245 locations across the country. It also provides automobile financing services. The company primarily generates revenue from its retail, wholesale, and auto financing businesses. CarMax offers a unique omni-channel experience, allowing customers to shop online or in-store. In the fiscal year that ended February 29, 2024, CarMax sold approximately 770,000 used vehicles and 550,000 wholesale vehicles at its auctions. During the same period, CarMax Auto Finance originated over $8 billion in auto financing, contributing to its substantial portfolio of more than $17 billion.

In its Q2 2025, the company demonstrated strong performance by purchasing around 300,000 vehicles, marking a 3% increase year-over-year. CarMax purchased around 269,000 vehicles from consumers with over half of these purchases coming through its online instant appraisal service. Approximately 57% of retail unit sales during the quarter were classified as omni-sales. Around 15% of retail unit sales were completed online, up from 14% last year, demonstrating CarMax’s effective integration of digital and in-store shopping options.

For fiscal Q2 2025, the company reported a revenue of $7.01 billion, surpassing analysts’ expectations by $187.41 million. The company achieved a net earnings per diluted share of $0.85, a 13% increase year-over-year, despite an increase in loan loss provisions.

CarMax Inc. (NYSE:KMX) is focused on improving efficiency in order to promote future growth. The company successfully rolled out a new order processing system nationwide across its stores and customer experience centers. This system helps associates guide customers through their buying journey. The company is focused on further improving efficiency and customer satisfaction through innovative tools like shopping accounts and a generative AI knowledge management system for associates. These tools are planned to be rolled out later this year. Additionally, the launch of an EV Hub on their website positions CarMax Inc. (NYSE:KMX) to meet the growing interest in electric vehicles and hybrids.

With its commitment to a seamless omni-channel experience and ongoing enhancements to operations, KMX stands out as an attractive option for investors seeking opportunities in the expanding used car market. It ranks among the top 5 on our list of the best used car stocks to buy according to hedge funds.

Insider Monkey’s Q2 2024 database reveals that 35 hedge funds held investments in CarMax Inc. (NYSE:KMX), amounting to over $1.1 billion in total stakes. Diamond Hill Capital is the most significant shareholder, possessing 6.7 million shares valued at nearly $491.6 million as of June 30.