AutoNation, Inc. (AN), CarMax, Inc (KMX): A Safe Drive for Your Portfolio

Apart from this, Asbury Automotive Group, Inc. (NYSE:ABG)’s gross profit incremented 16% as an outcome of increased sales volume and the repurchasing of 5 million shares.

As far as the forward-looking statements are concerned, the management of the company stated that the acquisitions of Bentley and Volkswagen franchises last December are followed up by the obtainment of Hyundai Motor Co (KRX:005380), Kai, and Toyota Motor Corporation (ADR) (NYSE:TM) franchises in the Atlanta market. With the prominent cash influx during the previous quarter, and the extended investment in the business, a marginally better performance in the foreseeable future won’t be surprising.

The problems for AutoNation don’t end here as there is another company capable of damaging its success. CarMax, Inc (NYSE:KMX), an inferior competitor of AutoNation, released its quarterly earnings last month. To the surprise of many, the company posted a profit of $146.7 million; this is a rise of 21.5% as compared to the preceding fiscal year, which amounted to $120.7 million.

The company also generated revenue of $3.3 billion, which beat the consensus estimate of $3.1 billion. CarMax, Inc (NYSE:KMX)’s margins were largely driven by the increased sales of used vehicles, which compensated for the loss incurred in the sales of new vehicles. The extensive focus on the sales of used cars bailed the company out, as the gross profit increased 17.3% to $448 million.

CarMax, Inc (NYSE:KMX) is planning to open around 15 stores every year for the next two years and the developments are right on track, as the company had already established five new stores before the end of the preceding quarter. Cutting down on expenses has also helped the company to post a profit and concentrate on the opening of new stores, but CarMax, Inc (NYSE:KMX) needs to step up its effort if it really wants to challenge AutoNation.

Thoughtful abstract

In my opinion, AutoNation is well set to outsmart its competitors and if you’re looking for long-term success, then investing in the company may prove to be a good deal. Due to the stiff competition, the increase may not be exponential, but the company’s planned acquisitions will quite possibly enable it to sustain slow and steady growth.

Ayush Singh has no position in any stocks mentioned. The Motley Fool recommends CarMax. The Motley Fool owns shares of Asbury Automotive Group (NYSE:ABG). Ayush is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article A Safe Drive for Your Portfolio originally appeared on Fool.com is written by Ayush Singh.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.