(VRM)
Vroom Inc is engaged in the business of buying and selling used vehicles through its e-commerce platform. The company functions in three segments namely, Ecommerce, which involves retail sales of used vehicles through the company’s ecommerce platform and fees earned on sales of value-added products associated with those vehicles sales. The TDA reportable segment represents retail sales of used vehicles from TDA and fees earned on sales of value-added products associated with those vehicles sales. The wholesale reportable segment represents sales of used vehicles through wholesale auctions.
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AutoWeb Inc is a digital marketing company for the automotive industry. The company helps automotive retail dealers and automotive manufacturers to market and sell new and used vehicles to consumers through the company’s programs for online lead and traffic referrals, dealer marketing products and services, online advertising and mobile products.
Group 1 Automotive (NYSE:GPI)
Houston-based Group 1 Automotive Inc. is a leading operator in the automotive retailing industry. After its initial public offering in October 1997, Group 1 grew to become one of the largest dealership groups in the United States.
Group 1 owns and operates 186 automotive dealerships, 242 franchises and 49 collision centers in the United States, United Kingdom and Brazil. The company sells cars and light trucks (new and used), service contracts, maintenance and repair services and vehicle parts. The company leverages management experience, emphasizes geographic and brand diversity, interrelated revenue streams, operational efficiencies and more.
Its earnings per share grew from $5.87 in 2014 to $10.93 in 2019 at a 2.99% operating margin.
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| Open411.060 | Close419.990 |
| Vol / Avg.387.593K / 132.826K | Mkt Cap5.594B |
| Day Range411.060 - 423.910 | 52 Wk Range255.730 - 440.320 |
Asbury Automotive Gr (NYSE:ABG)
Asbury Automotive Group is a regional collection of automobile dealerships that went public in March 2002. The company operates over 90 stores (will be over 150 with the Larry H. Miller acquisition) with associated parts and service departments and 25 collision centers (36 with Miller). About 80% of new-vehicle revenue is from luxury and import brands. Asbury also offers third-party financing and insurance products. Asbury operates in nine states (mostly Texas and the Southeast) and entered Colorado in 2019. Larry H. Miller stores will bring the total to 15 states. Asbury store brands include David McDavid and Park Place in Texas, Plaza in Missouri, and Nalley and Crown in the Southeastern U.S. Asbury generated $7.1 billion of revenue in 2020 and is based in the Atlanta area.
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| Open241.610 | Close245.770 |
| Vol / Avg.658.745K / 192.218K | Mkt Cap4.814B |
| Day Range238.375 - 249.375 | 52 Wk Range195.090 - 277.130 |
AutoNation (NYSE:AN)
AutoNation is the largest automotive dealer in the United States, with 2020 revenue of $20.4 billion and about 230 dealerships. The firm also has five AutoNation USA used-vehicle stores, four auction sites, and 74 collision centers all across 16 states primarily in Sunbelt metropolitan areas. New-vehicle sales account for about 51% of revenue; the company also sells used vehicles, parts, and repair services as well as auto financing. The company (formerly Republic Industries) spun off its waste management unit (Republic Services) in 1999 and its car rental businesses (ANC Rental) in 2000. Wayne Huizenga founded the company in the 1990s to bring the rollup acquisition strategy to auto retailing, which has proved to be a smart move.
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| Open168.510 | Close170.190 |
| Vol / Avg.873.542K / 505.572K | Mkt Cap6.747B |
| Day Range167.290 - 173.180 | 52 Wk Range133.130 - 197.180 |
Many experts predict the end of auto and truck dealerships over the next 10 to 15 years. Experts believe dealerships will fall victim to driverless vehicles, ridesharing, innovations in human mobility and changing consumer buying habits. That's why you need to know about auto and truck dealership stocks right now.
Over the past 2 decades, most auto and truck dealerships have prospered despite the Great Recession (the average dealership doubled its profits during that time), internet disruptors and even millennials’ decreased desire to own vehicles compared to previous generations.
This industry’s resiliency is worth banking on. Here are 5 auto and truck dealership stocks with potential.
Quick Look at the Best Auto and Truck Dealership Stocks:
- Vroom, Inc.
- AutoWeb, Inc.
- Group 1 Automotive Inc.
- AutoNation
- Asbury Automotive Group
Overview
Auto and truck dealership stocks are in a cyclical industry — success is dependent on consumer confidence. When consumers get nervous about the economy, dealerships feel the pinch and operate under low profit margins. This causes a common dilemma for dealership management during low demand periods. They can either bite into their profits by offering customer incentives or they can protect their profit margin while giving up sales to their competitors.
It’s true that auto and truck dealerships have felt the impact of Tesla, Uber, Lyft and other auto and truck market disruptors. However, most of these new entrants struggle to be profitable.
Consider these facts as you research this industry:
- Since 2013, total annual sales for new vehicles rose by more than $100 billion.
- Vehicle dealerships continually create new jobs.
- Auto dealerships have accounted for $1 trillion in sales in a single year.
- Dealership payrolls are approaching $100 billion per year.
Understanding an industry’s influencing forces helps you make better trading and investing decisions — including understanding consumer demand. Do careful research as you select the right car and truck dealer stocks for you.
Best Online Brokers for Auto and Truck and Dealership Stock
Most investments come with some amount of risk. Online brokers can provide you with the resources to help you manage the risks associated with stocks. Here are some of the best online brokers.
- Best For:Active and Global TradersVIEW PROS & CONS:Securely through Interactive Brokers’ website
- Best For:Global Broker for Short SellingVIEW PROS & CONS:securely through TradeZero's website
Features to Look for in Auto and Truck Dealership Stock
You’ll want to understand each company in detail, but here are 3 things you can research to be sure you’re choosing the right stock for your needs:
- Price-to-earnings ratio (P/E ratio): Since car and truck dealer stocks are cyclical, the P/E ratio is a useful evaluation metric. It indicates the investors’ present valuation of a stock by comparing the amount they are willing to pay with the stock’s actual earnings. You can calculate a stock’s P/E ratio by dividing the market price per share by the earnings per share.
- Revenue/long-term revenue growth: Checking present and historical revenue can give you an idea of a stock’s future potential. Current revenues prominently appear on a company’s income statements and quarterly earnings reports.
- Debt levels: A company’s debt levels can have a tremendous effect on its stock performance. Sometimes, a company must utilize a good portion of its assets to stay competitive. Check debt-to-equity ratios — divide the dealers’ total debt by total assets.
Auto and Truck Dealership Stocks for the Long Haul
Auto and truck dealerships have endured tough times in this country. Throughout these changing times, this sector has shown a consistent pattern of growth. If you are looking for an investment with relatively safe exposure and consistent growth, auto and truck dealership stocks may fit that category.
What is the world's largest autmotive dealership?
The world’s largest automotive dealership is the Penske Motor Group.
Are auto and truck dealership stocks a good investment?
Auto and truck dealership stocks have done well in the past few years, so it is a good investment.
Are auto and truck dealership stocks cyclical?
Auto and truck dealership stocks are considered cyclical stocks.
Continue reading: BEST TRUCKING STOCKS