7 Cheap Stocks Ready for a 30% Jump This Year

We believe CarMax (KMX) has the best business model in its, well, business. Other companies, like AutoNation (AN), Group 1 Automotive (GPI), Penske Automotive Group (PAG) and Sonic Automotive (SAH), have tried to mimic CarMax's business model in the past, but to no avail. The company has carved out a competitive moat based on its scale, which will continue to grow with five new store openings in 2012 and between eight and 10 new openings in 2013. This leg up on the competition will allow CarMax to expand profitably once macroeconomic conditions improve. CarMax has strong financials with about $156 million in cash and about $30 million in debt. We think the firm has plenty of room for both profit and growth. We believe profits will especially soar once the auto industry emerges from its current funk. Shares trade at $32.28 at the time of this writing. For interested buyers, we suggest a covered call strategy. We like the January 2012 sold calls to cover. Campbell Soup (CPB), and the rest of the packaged food firms, have recently had to deal with rising food costs and weak economic conditions worldwide. As such, Campbell has twice lowered its sales and earnings [...]

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