In this article, we discuss the 5 best used car stocks to invest in. If you want to read our comprehensive analysis of these stocks and the current market situation, go directly to 10 Best Used Car Stocks To Invest In.
5. Asbury Automotive Group, Inc. (NYSE:ABG)
Number Of Hedge Fund Holders: 32
One of the largest automotive retailers in the U.S., Asbury Automotive Group, Inc. (NYSE:ABG) provides new and used vehicles, as well as car repair and replacement parts, maintenance services, and collision repair services. The company’s strategic acquisitions made in 2021 have set it on pace to generate $16 billion in revenue in 2022, a 63% increase over the previous year.
For the fiscal first quarter of 2022, Asbury Automotive Group, Inc. (NYSE:ABG) announced that its quarterly revenues came in at $3.91 billion, up 78.38% on a year-over-year basis, and outperformed the market by more than $2.64 million. The company also reported an EPS of $9.27, beating expert estimates by $0.33.
Out of the 924 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2021, 32 were long Asbury Automotive Group, Inc. (NYSE:ABG) with stakes worth $1.04 billion. This is an increase from 22 funds in the preceding quarter, with stakes amounting to $995.6 million. David Abrams’ Abrams Capital Management is one of the leading stakeholders in Asbury Automotive Group, Inc. (NYSE:ABG), with over 2.1 million stakes worth approximately $365.87 million.
Here is what LRT Capital Management has to say about Asbury Automotive Group, Inc. (NYSE:ABG) in its Q1 2022 investor letter:
“Asbury Automotive Group is one of the largest automotive retailers in the United States. It operates 90 dealerships consisting of 112 franchises and 25 collision repair centers. The company’s stores offer new and used vehicles, parts, and service, as well as finance and insurance (F&I) products. Franchise agreements controlled by automotive manufactures and state laws create an environment of tightly controlled market entry and restricted competition.
The dealership industry is highly fragmented with 93.5% of dealers having only between 1-5 locations according to data from 2020. In fact, dealers with over 50 locations account for only 0.1% of the industry – a testament to the huge opportunity for consolidation that lies ahead. Industry dynamics, including the rising complexity of automobiles and the need for omnichannel distribution are favoring better capitalized and larger dealer groups. We believe Asbury Automotive Group has several distinct advantages, particularly its highly profitable parts and service business, its overexposure to the luxury vehicle business, which carriers the best margins, and its Clicklane omnichannel strategy. Asbury’s management has also been acting in the best interests of its shareholders by allocating capital towards acquiring dealerships to aggressively expand its business, and occasionally repurchasing stock when attractive acquisitions targets could not be found.
ABG is not a fast-growing SaaS business, but when paying a valuation of ¼ of the overall stock market, one does not need to make heroic assumptions about the future to enjoy strong returns as shareholders. We believe that over the next several years, Asbury will continue to acquire dealerships, occasionally buyback stock and invest to improve its digital shopping experience. We wrote about Asbury in detail in our August 2021 Investor Letter.”
