With car prices supposedly coming down, perhaps that is a negative?
The market frequently believes that. They’re generally wrong.
That’s because Carmax is more of a “flow” business.
They do hold some inventory on any given day, but to a first approximation they make a certain amount per car in a given year whether prices are high or low.
A while back the stock price took a dip because used car prices were rising and the narrative was that they couldn’t get the inventory they need.
The mood goes up and down, the price goes up and down.
At current prices under $90 I’d buy more but I probably have enough.
It’s my second biggest position. (tied)
I don’t believe that Carvana is going to put them out of business with their online-only approach.
The valuation appears to be a fair bit cheaper than usual for the firm on smoothed cash flow or earnings.
I believe that EPS will rise at double digit rates in the next few years, or not miss that by much.
That combination suggests a good outcome.
However I also believe in the tooth fairy, so buyer beware.
Jim