10 Best Used Car Stocks To Buy According to Hedge Funds

4. Group 1 Automotive Inc. (NYSE:GPI)

Number of Hedge Fund Investors: 37

Group 1 Automotive Inc. (NYSE:GPI) is a leading automotive retailer that operates 260 dealerships and 338 franchises across the United States and the United Kingdom, offering a wide range of new and used vehicles from a wide variety of brands. The company generates revenue through various channels, including vehicle sales, financing arrangements, service contracts, and automotive maintenance and repair services. The company leverages its extensive dealership network and omni-channel platform to meet customer demands effectively.

The company faced significant challenges in the second quarter of 2024 due to the CDK outage that impacted its US operations from June 19 to June 26. Despite this disruption, Group 1 Automotive Inc. (NYSE:GPI) demonstrated resilience by continuing to serve customers through alternative processes.

In the second quarter of 2024, Group 1 Automotive Inc. (NYSE:GPI) reported impressive financial results, achieving an adjusted net income of $133.1 million and total revenues of $4.7 billion, marking a second-quarter record. The company experienced all-time high new vehicle revenues of $2 billion in the US, driven by a 7% increase in new vehicle sales units. Used vehicle sales also saw growth both sequentially and year-over-year, demonstrating strong demand despite slight declines in gross profit per unit.

Additionally, the company has recently expanded its UK operations with two significant acquisitions. On October 1, 2024, the company announced the purchase of Soper of Lincoln BMW/MINI, located north of London in the county of Lincolnshire. This investment is expected to generate around $125 million in annual revenues. Earlier, on July 1, 2024, Group 1 Automotive Inc. (NYSE:GPI) acquired four Mercedes-Benz dealerships in Hertfordshire, projected to bring in $105 million in annual revenues.

In the Q2 2024 earnings call, management announced that the company is looking forward to closing the Inchcape acquisition, which is expected to add $2.7 billion in revenue and effectively double its size in the UK. These strategic acquisitions enable the company to strengthen its brand portfolio and customer reach, positioning it well for continued growth and profitability.

As of the second quarter of 2024, Group 1 Automotive Inc. (NYSE:GPI) was held by 37 hedge funds, with total stakes amounting to $451.38 million, according to Insider Monkey’s database.