Automobile retail stocks stand out in IBD’s Weekly Review screen, a list of industry group leaders with Earnings Per Share and Relative Price Strength Ratings of 85 or higher. It’s one of several powerful screens found in the IBD Stock Screener.
Like various types of retail stocks dealing with the complex impact of the coronavirus pandemic, auto dealerships have found themselves in a profitable quandary.
Covid-wary consumers are driving cars, wherever possible, rather than taking public transit. Many are driving on vacations as an alternate to flying. Still others simply have surplus cash, given federal stimulus and a lack of travel and entertainment options on which to spend. For many, a new car is an attractive alternative.
At the same time, the disruption of semiconductor supply chains has led to a short supply of new cars. Those that are available are typically selling at top dollar, and prices on the used-car market have simply gone through the roof.
Auto Retail Stocks
Asbury Automotive Group (ABG) is the No. 1-ranked retail stock in the group, according to IBD Stock Checkup. The stock carries a best-possible Composite Rating of 99. The Duluth, Ga.-based retail stock holds an 89 Relative Strength Rating. The company operates 91 dealerships and 25 collision-repair centers in nine states.
ABG stock is poised in a 16-week cup base. Shares on Tuesday traded 8% below the 216.98 buy point. But after a six-week rally, the stock pulled back slightly, potentially beginning a handle that would lower the buy point significantly.
Asbury reported its second-quarter earnings on July 27.
The auto retail stock group’s No. 3 and No. 4 stocks, Lithia & Driveway (LAD) and Sonic Automotive (SAH), are also basing. They do not turn up on the Weekly Review stock screener, however, because both of their RS ratings are below 85.
Carvana has a solid 90 RS rating. But its EPS rating is a lagging 31. CarMax has a passing EPS Rating at 85, but its RS Rating is a weak 73.
Penske, America’s Car-Mart
However, the No. 5-ranked auto retail stock is America’s Car-Mart (CRMT), which has a passing RS Rating of 85. It also has a best-possible EPS Rating of 99 and an almost-perfect Composite Rating of 97.
The stock has climbed well up the right side of a 10-week-old cup base ahead of its fiscal first-quarter report, due on Aug. 17. The buy point is at 177.55, 12% above where the stock traded on Tuesday.
Penske Automotive Group (PAG) sees most of its revenue from auto sales, although it also sells commercial trucks and holds a 29% interest in Penske Truck Leasing. The Bloomfield Hills, Mich., outfit is helmed by race driving legend Roger Penske, who went on to own the most successful race team in IndyCar history, racking up 18 wins.
Penske Automotive is IBD Stock Checkup’s No. 6-ranked auto retail stock. Climbing through five of the past six weeks, which included its second-quarter earnings report on July 28, Penske is the group’s stock closest to a buy point. On Tuesday, Penske shares were 4% below a 93.55 buy point in a 13-week cup base.
To scan through the other screens, go to the Research tab at Investors.com and click on IBD Stock Screener. Near the top left side of the page, under IBD Stock Lists, you’ll find 12 lists. All the lists in Stock Screener offer a look at stocks with bullish characteristics. The IBD Screen Of The Day is taken from those lists.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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