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.”
Source: Unsplash
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.
5. Group 1 Automotive, Inc. (NYSE:GPI)
Number of Hedge Fund Investors: 40
Group 1 Automotive, Inc. (NYSE:GPI) is one of the best used-car stocks to buy, according to hedge funds. On January 29, it was confirmed that Group 1 Automotive, Inc. (NYSE:GPI) had a record year as it delivered impressive fourth-quarter and full-year 2025 results.
Revenues in the quarter increased 0.6% to $5.6 billion, as full-year revenue increased 13.2% to $22.6 billion. The company achieved record revenue across all its major business lines and record gross profit in parts and service.
The growth underscored the company’s diversified business model’s strength and resilience. Net income from continuing operations dropped to $524.5 million compared to $530.6 million for the prior year . On the other hand, diluted earnings per common share from continuing operations totaled $25.13, compared to $36.72 per share.
During the year, Group 1 Automotive, Inc. strengthened its empire by successfully integrating dealership operations . The dealerships are expected to contribute annual revenues of about $640 million. The company also embarked on a UK-wide restructuring plan that targets workforce realignment and the strategic closure of certain facilities.
Group 1 Automotive, Inc. (NYSE:GPI) is an international retailer that operates 259 dealerships and 39 collision centers across the U.S. and the U.K. It sells new and used cars and light trucks, arranges vehicle financing, sells insurance and service contracts, and provides maintenance and repair services.
4. AutoNation, Inc. (NYSE:AN)
Number of Hedge Fund Investors: 40
AutoNation Inc. (NYSE:AN) is one of the best used-car stocks to buy, according to hedge funds. On January 16, JPMorgan upgraded AutoNation Inc. (NYSE:AN) to an Overweight from Neutral and set a $235 price target.
The price target hike underscores JPMorgan’s confidence that the company has the most visible earnings-revision trajectory among its peers in the auto retail sector. The investment bank has also touted the steady pace of share buybacks, which underscores its focus on shareholder value, backed by a robust balance sheet. AutoNation’s execution has not been perfect; JPMorgan expects the company to benefit from its brand mix of high domestic representation and a US-only regional footprint. Consequently, it expects its organic performance to be in line or slightly better than that of its peers.
The remarks come on the backdrop of the company moving to strengthen its footprint with the acquisition of Jerry’s Toyota in Baltimore for $123 million. The acquisition is expected to generate about $123 million in annual revenue, driven by its 2,600 new and used vehicle sales.
AutoNation, Inc. (NYSE:AN) is the largest automotive retailer in the United States, operating over 300 locations to sell new and used vehicles, parts, and accessories. The company provides comprehensive services, including financing, insurance, maintenance, collision repair, and vehicle reconditioning.
3. Lithia Motors, Inc. (NYSE:LAD)
Number of Hedge Fund Investors: 45
Lithia Motors Inc. (NYSE:LAD) is one of the best used-car stocks to buy, according to hedge funds. On January 9, analysts at Benchmark reiterated a Buy rating on Lithia Motors Inc. (NYSE:LAD) and a $400 price target.
The research firm maintained its bullish stance despite adjusting its forecasts for the company’s performance metrics. It estimates reductions in new-vehicle volumes and gross profit per unit. The research firm also projects $409 million in adjusted EBITDA in the fourth quarter.
The bullish stance comes as Lithia Motors Inc. increasingly expands its footprint in Canada with the acquisition of Fine Ford in the Greater Toronto Area. The acquisition underscores the company’s continued focus on strengthening its network in North America, as it is expected to increase annualized revenue by $100 million.
“This strategic investment in Canada’s number one volume brand strengthens our omnichannel network in the nation’s largest market,” said Bryan DeBoer, Lithia and Driveway President and CEO. “Fines Ford’s customer loyalty and established reputation in the community align perfectly with our strategy to provide exceptional experiences wherever, whenever, and however customers desire.”
Lithia Motors, Inc. (NYSE:LAD) is one of North America’s largest automotive retailers, providing a full spectrum of transportation solutions, including new/used vehicle sales, financing through Driveway Finance Corporation, and repair services. Operating over 470 locations across the U.S., Canada, and the UK, they utilize an omnichannel approach (including Driveway.com) to facilitate online and in-store purchasing.
2. CarMax, Inc. (NYSE:KMX)
Number of Hedge Fund Investors: 54
Carmax Inc. (NYSE:KMX) is one of the best used-car stocks to buy, according to hedge funds. Late last year, the company reiterated plans to boost ad spending as it seeks to repair its business. The company is racing against time to address a significant sales slump that has wiped out nearly half of its market value.
“We are optimistic that our immediate pricing and marketing actions will improve our sales performance, but pressure earnings in the near term,” interim Chief Executive Officer David McCreight said in an earnings call.
The company is also targeting $150 million in cost cuts, focusing on general and administrative expenses. The effort will include layoffs affecting nearly a third of the company’s workforce.
Following the remarks, Truist Securities raised its price target to $37 from $35 and reiterated its Hold rating. The price target hike is in response to third-quarter results that came in line with estimates. The cautious outlook comes amid concern that the company is under immense pressure of being caught in the middle of an online juggernaut and savvy traditional dealer groups.
CarMax, Inc. (NYSE:KMX) is the largest U.S. used vehicle retailer with 250+ locations and a “no-haggle” pricing model, specializing in certified used cars, financing, and direct consumer purchases’.
1. Copart, Inc. (NASDAQ:CPRT)
Number of Hedge Fund Investors: 59
Copart Inc. (NASDAQ: CPRT) is one of the best used-car stocks to buy, according to hedge funds. On January 26, Copart Inc. (NASDAQ:CPRT) entered into a new $1.25 billion unsecured senior revolving credit agreement. The agreement is to replace a previous credit facility that was terminated and fully repaid .
Interest rates on the new revolving credit facility are based on either a fixed rate plus a margin of 0.75% to $1.125% or a daily rate plus a margin of 0% to 0.125%. The company can request up to two one-year extensions on the new revolving credit facility, which is set to mature on January 23, 20231. Copart Inc. plans to use net proceeds from the facility for general corporate purposes, including working capital, capital expenditures, dividends, acquisitions, and other investments.
The company delivered solid first-quarter fiscal 2026 results, with revenue up 0.7% year over year to $1.16 billion and gross profit of $537 million. Net income was up 11.5% to $403.7 million, leading to diluted earnings per share of $0.41, up from $0.37 a year earlier.
Copart, Inc. (NASDAQ:CPRT) is a global leader in online vehicle auctions and remarketing services, specializing in the sale of used, wholesale, and salvage title vehicles. The company connects sellers—primarily insurance companies, dealers, and fleets—with buyers like dismantlers and body shops via its proprietary VB3 digital auction platform.
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