10 Cheap and High-Quality Stocks Picked by Former SAC Capital Analyst

1. CarGurus, Inc. (NASDAQ:CARG)

Number of Hedge Fund Holders: 25  

Prevatt Capital’s Stake: $26,542,000

CarGurus, Inc. (NASDAQ:CARG) is the top stock pick of Prevatt Capital. The firm runs an online marketplace for new and used cars. CarGurus, Inc. (NASDAQ:CARG) posted earnings for the first quarter of 2024 in early May, reporting earnings per share of $0.32, beating market estimates by $0.04. The revenue over the period was $215 million. As new vehicles become more expensive, even as the prices of these new vehicles diminish fast in the first few years of ownership, car buyers have been flocking to used car sites to get good values on their purchases. CarGurus, Inc. (NASDAQ:CARG) is the most dominant used car website in the North American continent.

The wide moat of the firm, a Tepper favorite, can be understood by looking at the traffic of CarGurus, Inc. (NASDAQ:CARG) compared to other websites. The former draws 50% more traffic than the nearest competitor. The company reported 29.3 million monthly unique users in the fourth quarter of 2023,, up 11% year-on-year. Last year, the marketplace business of the firm ended the year with a 10% growth in revenue. All these numbers indicate that the firm, even as it remains embedded into car dealerships across the US, continues to produce value to investors as a tech offering.

While we acknowledge the potential of CarGurus, Inc. (NASDAQ:CARG) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Citigroup but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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