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Bull of the Day

 

There are a whole lot of people out there worried about “peak auto.” That’s basically the point at which the auto buying stops and manufacturers are left holding the bag. Today’s Bull of the Day, while in the automobile business, doesn’t have to worry about a glut of new cars. They are in the used car business and business is booming.

America’s Car-Mart (CRMT - Free Report) is a Zacks Rank #1 (Strong Buy) with Value and Momentum Style Scores of A to go along with a Growth Score of B. America’s Car-Mart, Inc., through its subsidiaries, operates as an automotive retailer in the United States. It primarily sells older model used vehicles and provides financing for its customers. As of April 30, 2016, the company operated 143 dealerships in the South-Central United States. America’s Car-Mart, Inc. was founded in 1981 and is headquartered in Bentonville, Arkansas. They are mostly “Buy here, pay here” lots. That means they finance most of the cars they sell. So these are typically buyers on the lower end of the credit scale. For me, it implies that they may be more insulated to credit crunches than other dealerships that depend on outside liquidity to finance purchases.

The company is coming off a big earnings beat with EPS coming in at 87 cents versus expectations calling for 51 cents. This big beat was enough to convince analysts to revise their estimates for the current quarter, next quarter, current year and next year. The bullish sentiment is most evident in the current year revisions. Analysts have revised to the upside, pushing up our current year Zacks Consensus Estimate from $2.07 to $2.81.

Shares of CRMT were stuck in purgatory for the first six months of the year, bouncing between $20 and $27. Things heated up in July as shares broke through resistance at $27. From there it’s been virtually straight up, with shares popping up to a fresh 52-week high today. This still pales in comparison to the 2015 highs in the mid-$50s.

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