I listened to Cramer’s outline of this one as he reported on it after a big pop yesterday, and I had seen CarMax before in one of the Fool services.
Has anyone here looked at it?
→ They seem to have a big growth runway because they are not all over the US yet
→ They have a back-end service of getting cars, fixing them up and wholesaling them to dealers (second profit center)
→ They make average $2k on each transaction
It looks like their PE and market cap may be reasonable. That’s all I have, I’m just curious if this company is of interest to anyone over here.
Karen
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Might be a bit overvalued.
http://invest.kleinnet.com/bmw1/stats16/KMX.html
The problem is that pundits tend to bring up stocks when the action if fast and furious but you have to be a momentum trader to buy them at that point. On the other hand, if you like the company after researching it properly (I haven’t researched CarMax), put it on you watch list while you wait for the fat pitch.
Imagine buying at $7 in 2009. I would be rich beyond measure if I had that time machine!
Denny Schlesinger
Hello Karen,
I bought some KMX in Dec, 2013 based on a TMF recommendation. It’s up over 50% since I first purchased it. Then, just a few days ago, Seeking Alpha published an article (http://seekingalpha.com/article/3050566-carmax-is-great-but-…) suggesting that competitors Autonation (AN) and Penske Auto Group (PAG) might both be better investment opportunities.
The article asserts that KMX is the largest of the three companies with a formidable moat. However, KMX sports a P/E of 27.4 while AN is trading at 17.5 and PAG trades at 16.6. Certainly one ratio is insufficient information to make a decision, but it it is enough to warrant further investigation. I have not yet performed any further analysis, but I thought you might be interested in this so far as it goes.
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Denny,
I would like to thank you for all of your helpful posts.
Imagine buying at $7 in 2009. I would be rich beyond measure if I had that time machine!
Wouldn’t we all! ;^)
Cheers,
Chris
I would like to thank you for all of your helpful posts.
Saul has managed to gather a wonderfully enthusiastic group of Foolish investors and it is a pleasure to post here. One never stops learning and picking up good tips to investigate. So let’s thank Saul!
Denny Schlesinger
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