12 Best Consumer Cyclical Stocks to Buy According to Analysts

9. Group 1 Automotive, Inc. (NYSE:GPI)

Number of Hedge Fund Holders: 40

Average Upside Potential as of November 28: 16.97%

Group 1 Automotive, Inc. (NYSE:GPI) is an automotive retailer with a presence in the US and UK. The firm has 259 dealerships across the US and UK, out of which 146 are in the US.

As of November 28th, out of the 10 analyst recommendations covering Group 1 Automotive, Inc. (NYSE:GPI), two were a Strong Buy, while four were a Buy and four were Hold. The average share price target was $469.11. One such rating for Group 1 Automotive, Inc. (NYSE:GPI) came on November 12th from Barclays.

It set an Overweight rating on the stock and a $510 share price target. The coverage came as part of the bank’s broader coverage of automotive firms, which saw the bank set Overweight ratings for firms including AutoNation and Lithia Motors. In its note, Barclays noted that Group 1 Automotive, Inc. (NYSE:GPI) was trading at a P/E ratio below its historical average and that of its peers in the dealership industry.

Group 1 Automotive, Inc. (NYSE:GPI)’s fiscal third-quarter earnings saw it report $10.45 in EPS, which fell short of analyst estimates of $10.81. During the earnings call, analysts questioned the firm about the softening of US luxury car sales, its decision to exit its UK Jaguar Land Rover dealerships, and the potential of partnering up with Chinese brands in the UK.

In response, management outlined that while there was some inventory buildup for luxury US cars in Q3, the situation will become clearer in Q4. As for working with Chinese brands, Group 1 Automotive, Inc. (NYSE:GPI)’s management stressed that it was holding discussions and would decide based on whether the retail model suited shareholder interests.