CarMax, Inc (KMX) Has a Long Runway for Growth

That leaves us with Carmax. From 2002 to 2007, Carmax grew sales per share at a whopping 14.5% annual rate. The growth rate slowed considerably during the worst auto recession in recent history, but the company is beginning to show signs of resuming a high rate of growth. It is adding new stores at a healthy rate and comparable store sales are not suffering as a result. The company’s leading market share in the U.S. late model cars market enabled it to remain profitable during the recession, which suggests there is significant downside protection in the event of another downturn.

Conclusion

All three companies are priced for growth, but only Carmax represents the best growth opportunity. It has a long runway for growth in the U.S. and has demonstrated that it can remain profitable even during an auto recession that took out General Motors Company (NYSE:GM). So, for those who are bullish on car dealerships, sell AutoNation and Sonic Automotive and buy Carmax.

The article This Car Dealership Has a Long Runway for Growth originally appeared on Fool.com and is written by Ted Cooper.

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