In this article, we will look at the 10 Best Used Car Stocks To Buy According to Hedge Funds.

The US automotive retail market was on edge as it was forced to defy extraordinary disruptions in 2025. The sector had to contend with supply chain snarls, unpredictable tariffs, and the removal of electric vehicle tax credits.

“To say it’s been a sales roller coaster of a year would be an understatement,” said Thomas King, president of OEM solutions at J.D. Power.

Likewise, analysts have warned that sustaining growth in 2026 could be an uphill task, given the soaring concerns over economic uncertainty and tariff-related costs. Cox Automotive has already warned that auto sales could drop by 2.4% as slower economic growth dampens consumer demand.

Nevertheless, there is growing optimism that lower interest rates could be the biggest tailwind for demand, thereby restoring stability in the embattled sector. “These dynamics set the stage for a more balanced and potentially stronger performance as 2026 progresses,” said J.D. Power’s King.

In its quarterly review, CarGurus points out that price-conscious customers on a budget are likely to buy high-mileage, older used cars. On the other hand, big spender premium buyers are likely to stick with new products.

Demand for used cars has been skyrocketing, in part because they last longer than they did in the past. Price-conscious customers accounted for a 73% year-over-year increase in used-car purchases in 2025. Most customers focused on a sticker price under $30,000 and vehicles aged 7 years or older.

“For used cars, the growth is really happening in under-$30,000 vehicles,” Roberts said. “Traditionally the used-car market concentrated on people looking for three-to-four-year-old vehicles. That was the sweet spot but, realistically, that’s the age group which is hardest to find right now.”

Our Methodology

To compile our list of the 7 best used car stocks to buy according to hedge funds, we used the Finviz and Yahoo stock screeners to find the largest used car companies. We focused on companies favored by institutional investors. The stocks are ranked in ascending order based on the number of hedge funds holding stakes in them in the third quarter of 2025.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research shows we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).

Best Used Car Stocks To Buy According to Hedge Funds

7. Cars.com Inc. (NYSE:CARS)

Number of Hedge Fund Investors: 21

Cars.com Inc. (NYSE:CARS) is one of the best used-car stocks to buy, according to hedge funds. Analysts remain bullish on Cars.com Inc. (NYSE:CARS). Over the past three months, five Wall Street firms set 12‑month targets averaging $17.75, ranging from $13 to $25, implying a potential 56% upside from the current price of $11.36.

On January 29, Cars.com Inc. (NYSE:CARS) launched a new powerful tech and advertising solution for its dealer customers. Built based on consumer demand and inventory data, the AI-powered inventory video solution is designed to create VIN-specific video advertisements for dealer inventory. On the other hand, the Market Area Expansion tool will allow dealers to display inventory beyond their local market and to offer vehicle shipping and delivery services to customers.

The company is leveraging proprietary consumer demand and inventory data to power the new AI video solution. The ultimate goal is to unlock new shipping and delivery options and enable customers to enjoy new integrated wholesale options.

“By putting AI-powered technology and market expansion tools in the hands of our customers, Cars.com is connecting highly-engaged shoppers with the right inventory, driving twice the lead conversion, and ensuring our partners grow faster and more profitably,” said Lisa Gosselin, Chief Commercial Officer for Cars.com Inc.

Cars.com has also integrated its wholesale tools through the AccuTrade and DealerClub platforms to accelerate wholesale transactions for aging units.

Cars.com Inc. (NYSE:CARS) is a digital automotive marketplace connecting car shoppers with dealers and private sellers. It serves as an advertising and lead-generation platform, reaching about 26-27 million monthly visitors.

6. Penske Automotive Group, Inc. (NYSE:PAG)

Number of Hedge Fund Investors: 27

Penske Automotive Group Inc. (NYSE:PAG) is one of the best used-car stocks to buy, according to hedge funds. On January 26, Penske Automotive Group Inc. (NYSE:PAG) affirmed plans to expand its presence in Florida with the acquisition of two Lexus dealerships.

The company has inked an agreement to acquire Lexus of Orlando and Lexus of Winter Park in the Orlando metropolitan area of central Florida. With the acquisition, the company is poised to add $450 million in annualized revenue. It is to fund the acquisition using cash flow from operations and availability under its US credit agreement.

North American Operations Officer Rich Shearing said, “The acquisition of these premier Lexus dealerships represents another strategic addition to the Penske Automotive Group portfolio. The acquired dealerships will expand the Company’s scale in one of the fastest growing states in the country while leveraging the Company’s existing infrastructure in Central Florida.”

Earlier on January 9, Benchmark reiterated a Buy rating and a $190 price target on Penske Automotive Group. The positive stance comes despite analyst Michael Albanese making “modest reductions” to forecasts for new vehicle sales, aftersales, and G&A leverage for the automotive retailer. The research firm expects the company to deliver EBITDA of $341 million and earnings per share of $3.10 for Q4.

Penske Automotive Group, Inc. (NYSE:PAG) is a diversified international transportation services company that operates as one of the world’s premier automotive and commercial truck retailers. It sells new and used vehicles, provides maintenance and repair services, and offers financing and insurance products across the US, UK, Canada, Germany, Italy, and Japan.