CarMax Inc. - Aggressive Growth

CarMax, Inc. (KMX) shares are soaring, setting new all-time highs, but the surging estimates should be enough to keep cautious investors interested.

The company is also hiring to support its expansion efforts, which bodes well for the future of this Zacks #1 Rank (Strong Buy).

Company Description

CarMax is a national used car retailer known for its no-haggle philosophy that puts customers at ease. The company has 103 locations across the U.S.

Estimate Outlook

While the Zacks Consensus Estimates for CarMax have not moved too much since the original feature on Oct 7, the overall trend is still great. Analysts are projecting 37% earnings growth this fiscal year and another 6% next year.

Estimates jumped on the last quarterly report, which came in late September.

Now Hiring

On Nov 3 announced that it is looking to hire over 1,200 employees as part of its expansion plans. Often we are skeptical of financial results, given the accounting liberties that some companies choose to take.

But when a company goes on a hiring spree, which is a definite sign of positive things to come. Companies don't hire until they are virtually certain about the future performance, which is blatantly obvious given the vast number of unemployed that just doesn't seem to budge.

The Chart

Shares of KMX have been on fire since the summer, now trading at all-time highs. The previous high was just under $29 a share in 2007.

When stocks run up that much, that fast, many investors are weary, but if you look the trend in earnings estimates these levels are easily justified.

Read the October 7th Feature Here

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service

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