AutoNation Inc. Is my thought process right?
1) Recovering US economy
2) Average age of car = 11.4 years. Record high. A result of the financial crisis?
3) Harsh winter resulting in wears and tears of automobiles.
4) Low i/r environment
All of this seems to point towards a new start in the car purchasing cycle. Thus car dealers.
AutoNation is a new and used car dealer. Even if the start in the car purchasing cycle does not happen yet, it still pays to wait as it profit from the used car segment.
16.7 PE
History of continual share repurchase
Taking advantage of low i/r environment by increasing debt, and buying back shares.
Is my thought process right?
I initially looked at GM, Ford, etc... But it wont be a concentrated play on the US car purchasing cycle as they do have a global presence.
Anyone?
looking at all the positives, sure, sounds great but a bit simplistic...
Investment horizon? Current valuation vs. historically and vs. competitors? Investment Risks? more companies deciding to open direct dealerships (Tesla model?) What happens when interest rates suddenly spike in next 1-3yrs? any historic data on how they perform in that environment?
Makes sense you want a concentrated bet on US replacement cycle... you should look up @"BlackHat"s thesis on ORLY last year that was pretty spot on since it's related...
KMX way better, but either way you're about a year late.
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