8 Most Promising Car Stocks According to Hedge Funds

4. CarMax Inc. (NYSE:KMX)

Number of Hedge Fund Investors: 57

One of the Most Promising Stocks, CarMax, Inc. (NYSE:KMX) is a US-based retailer of used automobiles. It is divided into two parts. CarMax Sales Operations is the first; it handles auto retailing and service activities, such as buying and selling used cars and associated products and services. CarMax Auto Finance, the second division, specializes in financing clients who purchase vehicles from the business.

CarMax, Inc. (NYSE:KMX) revealed its third-quarter fiscal 2025 financial results on December 19. Gains throughout the company helped it achieve an earnings growth of more than 50%. Comparable store used unit sales were up 4.3% YoY during the quarter, while retail used unit sales climbed by 5.4% from the previous year. Sales of wholesale units rose by 6.3% YoY as well.

The total sales of $6.2 billion were 1.2% higher than the third quarter of the previous year. Strong unit margin performance and unit volumes contributed to the quarter’s $677.6 billion gross profit, which increased by 10.6%. Net earnings per diluted share were 81 cents, up 56% from a year before.

Needham maintained a Buy rating on the shares and raised the price objective on CarMax, Inc. (NYSE:KMX) from $98 to $101. The firm cites the continuation of second-half dynamics in the used auto market to begin FY25, with industry unit gains, particularly CarMax unit and share gains, driving fixed cost absorption as well as the continuation of improved auto loan performance, according to the analyst in a research note.