1. Lithia Motors Inc (NYSE:LAD)
Abrams Capital Management Equity Stake: $827.68 Million
Number of Hedge Fund Holders: 48
Lithia Motors Inc (NYSE:LAD) is one of billionaire David Abrams’ best stock picks. Most analysts also give the stock a thumbs-up. The stock carries a consensus Buy rating and an average price target of $350.11, which reflects more than 30% upside potential.
On March 30, the equity research firm Benchmark reiterated its Buy rating on Lithia Motors Inc (NYSE:LAD) with a price target of $400. However, the firm slashed its Q1 2026 estimates for Lithia Motors.
While the firm remains bullish on the automotive retailer’s overall outlook, it’s taking a more conservative view for the time being, leading to the estimate revisions. In particular, Benchmark is more cautious regarding average selling prices and per-unit gross profit for used vehicles.
The firm lowered its estimate for Lithia Motors’ adjusted EBITDA in Q1 to $379 million from $408 million. It also cut its estimate for adjusted EPS to $7.39 from $8.49. The firm noted that the used vehicle market remains tight, and pointed out that this continues to affect unit gross profit for dealerships. While this is the case in the market, Benchmark noted that the conditions remain within expectations for this time of the year.
In full-year 2025, Lithia Motors’ revenue rose 4% to $37.63 billion and adjusted net profit jumped 8% to $854.7 million. Service and parts account for around 50% to 60% of the company’s profit.
Lithia Motors exited Q4 2025 with $1.5 billion in cash and cash equivalents. In the course of 2025, the company spent $947 million on share repurchases and $2.4 billion on strategic acquisitions. It closed the year with $621.6 million remaining under the current repurchase program.
Lithia Motors Inc (NYSE:LAD) is an American automotive dealership group based in Medford, Oregon. It operates a network of more than 450 locations and serves as a one-stop shop for drivers. In addition to selling new and used vehicles, it sells vehicle parts and offers repair and maintenance services. Moreover, the company offers financing and insurance.
While we acknowledge the potential of LAD to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than LAD and that has 100x upside potential, check out our report about the cheapest AI stock.
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