8 Best Car Repair Stocks to Invest In

6. AutoNation, Inc. (NYSE:AN)

Number of Hedge Fund Holders: 32

AutoNation, Inc. (NYSE:AN) is a major automotive retailer in the United States. The company operates through a network of franchises that sell both new and used vehicles. The company deals in Domestic, Import, and Premium Luxury segments with franchises in each segment selling parts and offering repair services to customers.

The company had a rough fiscal third quarter of 2024, characterized by a CDK outage, which is a major software used by various players in the industry. Its net revenue decreased 4% year-over-year to $6.6 billion, whereas the gross profit also dipped 9% during the same time. However, on the bright side AutoNation, Inc. (NYSE:AN) Customer Financial Services segment and After-Sales segment, led the gross profit 2% higher on a subsequent basis.

Management noted that its After-Sales segment, which deals with parts and repairing services has been showing continuous momentum despite the CDK outage. While the overall revenue of the company dipped, the segment revenue improved by around 1% year-over-year. More importantly, the segment profit margins showed a 50 bps improvement during the same time led by improved parts and labor rates, leverage, and higher value orders. Looking ahead, management notified of improving technician headcount thereby further boosting productivity within the segment. It is one of the best car repair stocks to invest in now.

Conventum – Alluvium Global Fund stated the following regarding AutoNation, Inc. (NYSE:AN) in its Q2 2024 investor letter:

“AutoNation, Inc. (NYSE:AN) (down 3.7%) operates around 350 dealer franchises across the US, as well as collision centres and used vehicle stores. When compared to Group 1, it sells more units at a slightly higher price and margin, and derives around 50% more revenue. But its strategy is different, with nationwide branding and centralised operations. Although we prefer the Group 1 model, the economics of Autonation look attractive to us. And by introducing this into the portfolio we could thereby invest more than 5% of assets in this sector without necessitating the sale of other attractive large positions. And so after selling a little Group 1 and buying Autonation we ended the quarter with 4.1% and 1.9% positions respectively.”