1. Lithia Motors, Inc. (NYSE:LAD)
Abrams Capital Management’s Stake Value: $705,603,000
Percentage of Abrams Capital Management’s 13F Portfolio: 16.46%
Number of Hedge Fund Holders: 46
PE Ratio as of June 17: 5.76
Lithia Motors, Inc. (NYSE:LAD) operates as an automotive retailer in the United States. The company operates through three primary segments: Domestic, Import, and Luxury. On April 20, Lithia Motors, Inc. (NYSE:LAD) reported earnings for the fiscal first quarter of 2022. The company reported earnings per share of $11.96, exceeding expectations by $1.62. The company’s revenue for the quarter came in at $6.71 billion, up 54.39% year over year, ahead of expectations by $363.33 million.
As of April 21, Guggenheim analyst Ali Faghri has a $578 price target and a Buy rating on Lithia Motors, Inc. (NYSE:LAD). The analyst also named the stock a “Best Idea”.
As of March 31, Abrams Capital Management’s stake in Lithia Motors, Inc. (NYSE:LAD) is valued at $705.60 million. It is the top 13F holding of the hedge fund and covers 16.46% of David Abrams’ 13F portfolio. As of June 17, Lithia Motors, Inc. (NYSE:LAD) has a forward PE ratio of 5.76, which makes it one of David Abrams’ top value stock picks.
At the end of the first quarter of 2022, 46 hedge funds were bullish on Lithia Motors, Inc. (NYSE:LAD) with stakes worth $2.55 billion. This is compared to 56 positions in the previous quarter with stakes worth $2.62 billion.
Here is what Oakmark Funds had to say about Lithia Motors, Inc. (NYSE:LAD) in its “Oakmark Select Fund” first-quarter 2022 investor letter:
“As is typical during periods of significant volatility, we added a new name to the portfolio. Lithia Motors (NYSE:LAD) is the largest franchised auto dealer group in the United States. The company has a long history of creating shareholder value through best-in-class operations and consistent acquisitions of smaller dealers at attractive returns. There is a long runway for management to continue creating value through such acquisitions. Management believes this will drive earnings per share to more than $50 by 2025, even as car prices return to pre-pandemic levels. Meanwhile, Lithia has a significant opportunity to further accelerate growth through Driveway, its online auto retailing platform. We believe Lithia’s existing nationwide infrastructure provides Driveway with significant competitive advantages in e-commerce, which smaller dealers will struggle to replicate. Driveway is not generating any earnings today, but it could become a major contributor over the next five to seven years. With the stock priced at less than 7x management’s 2025 EPS target and with substantial future growth potential from Driveway, we believe Lithia shares are a bargain today.”
You can also take a look at 10 Best Value Stocks To Buy Now According To Howard Marks and 12 Best Value Dividend Stocks to Buy Now.
