Is CARG a good stock to buy? We came across a bullish thesis on CarGurus, Inc. on r/StockPickNews by EaseQuiet529. In this article, we will summarize the bulls’ thesis on CARG. CarGurus, Inc.’s share was trading at $37.67 as of May 5th. CARG’s trailing and forward P/E were 18.86 and 14.45 respectively according to Yahoo Finance.
CarGurus, Inc. operates an online automotive platform for buying and selling vehicles in the United States and internationally. CARG presents a compelling investment opportunity as its current valuation appears disconnected from both its historical trading multiples and intrinsic value estimates, creating a favorable setup for long-term investors.
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The stock is currently trading at a P/E ratio of approximately 18x to 21x, representing a substantial compression of nearly 70% compared to its 9-year historical average of 71x and significantly below its 3-year average of 52x, suggesting that the market is pricing in a far more pessimistic outlook than the company’s fundamentals warrant. This disconnect becomes even more evident when considering discounted cash flow (DCF) analysis, which estimates a fair value of approximately $69.54 per share, implying nearly 50% upside from the current trading level around $35.45, driven by the company’s ability to generate sustainable long-term cash flows.
While the company’s most recent quarterly results showed a mixed picture, with Q4 earnings per share exceeding expectations at $0.63 versus $0.61, the revenue miss of $209 million compared to the expected $239 million appears to have disproportionately impacted investor sentiment.
However, this temporary top-line softness does not undermine the company’s broader profitability trajectory or its strong positioning within the digital automotive marketplace. As CarGurus continues to optimize its platform, improve monetization, and leverage its data-driven marketplace advantages, the current valuation provides an attractive entry point with meaningful upside potential as sentiment normalizes and fundamentals reassert themselves.
Previously, we covered a bullish thesis on Carvana Co. (CVNA) by Investing City in May 2025, which highlighted the company’s vertically integrated e-commerce model, strong financing engine, and improving profitability through operational efficiencies. CVNA’s stock price has appreciated by approximately 18.35% since our coverage. EaseQuiet529 shares a similar view but emphasizes on valuation disconnect and intrinsic upside in CarGurus, Inc.
CarGurus, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held CARG at the end of the fourth quarter which was 31 in the previous quarter. While we acknowledge the risk and potential of CARG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CARG and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
