CarMax, Inc (KMX), Sonic Automotive Inc (SAH): This Dealership is Outgrowing the Competition

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More importantly, CarMax, Inc (NYSE:KMX) remained profitable during the recession due to its number one share of late model U.S. car sales. As a result, investors who buy CarMax benefit from its tremendous growth potential while being shielded from another downturn in the economy.

At 0.8x sales, CarMax, Inc (NYSE:KMX) is priced for growth but not extreme growth. The company will inevitably grow into its current valuation, and could easily surprise to the upside — giving shareholders an outsized return.

Bottom line

The market is not fully accounting for the growth opportunities available to car dealerships, but AutoNation, Inc. (NYSE:AN) and Sonic Automotive Inc (NYSE:SAH) have too much hair to be worth consideration. Only CarMax has the great business model to go with the reasonable valuation that investors should expect.

The article This Dealership is Outgrowing the Competition originally appeared on Fool.com is written by Ted Cooper.

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