1. Lithia Motors, Inc. (NYSE:LAD)
Number Of Hedge Fund Holders: 56
Lithia Motors, Inc. (NYSE:LAD) is an American nationwide automotive dealership group headquartered in Medford, Oregon. One of the largest providers of personal transportation solutions in the U.S., it is also among the fastest growing companies in the Fortune 500.
Lithia Motors, Inc. (NYSE:LAD) released its better-than-expected earnings report for the fiscal first quarter of 2022 on April 20. The company reported an EPS of $11.96, beating market estimates by $1.62. The automobile retailer also generated quarterly revenues that amounted to $6.71 billion, an increase of 54.39% on a year-over-year basis, surpassing the market consensus by $363.33 million.
On April 21, Guggenheim analyst Ali Faghri raised the price target on Lithia Motors, Inc. (NYSE:LAD) to $578 from $542 and maintained a Buy rating on the shares of the company while reiterating the stock as a “Best Idea”. The analyst believes that the company can “conservatively” grow its earnings at a low-teens percentage compound annual growth rate through 2025, and foresees EPS for the fiscal year 2023 to potentially exceed $50.
The investor sentiment for the stock has largely been positive, making Lithia Motors, Inc. (NYSE:LAD) one of the best used car stocks out there. At the end of the fourth quarter of 2021, 56 hedge funds in the database of Insider Monkey held stakes worth $2.64 billion in Lithia Motors, Inc. (NYSE:LAD). Of these, David Abrams’ Abrams Capital Management held the largest stake in the company, with a position worth $698.15 million.
Here is what Oakmark Select Fund has to say about Lithia Motors, Inc. (NYSE:LAD) in its Q1 2022 investor letter:
“As is typical during periods of significant volatility, we added a new name to the portfolio. Lithia Motors (NYSE:LAD) is the largest franchised auto dealer group in the United States. The company has a long history of creating shareholder value through best-in-class operations and consistent acquisitions of smaller dealers at attractive returns. There is a long runway for management to continue creating value through such acquisitions. Management believes this will drive earnings per share to more than $50 by 2025, even as car prices return to pre-pandemic levels. Meanwhile, Lithia has a significant opportunity to further accelerate growth through Driveway, its online auto retailing platform. We believe Lithia’s existing nationwide infrastructure provides Driveway with significant competitive advantages in e-commerce, which smaller dealers will struggle to replicate. Driveway is not generating any earnings today, but it could become a major contributor over the next five to seven years. With the stock priced at less than 7x management’s 2025 EPS target and with substantial future growth potential from Driveway, we believe Lithia shares are a bargain today.”
You can also take a look at 15 Best Technology Stocks To Buy Now and 12 Safe Stocks To Buy For Beginner Investors.
