Carvana Co. (NYSE:CVNA) is one of the stocks that Jim Cramer shed light on. While discussing the company, Cramer mentioned that he believes in the leadership of its CEO. He commented:
“… I believe in Carvana, not necessarily as a short-term trading vehicle, but as a long-term investment because I believe in the leadership of CEO Ernie Garcia, who’s created a tremendous amount of value over the years… Management rolled out some new long-term financial targets. They want to sell 3 million retail units per year and an adjusted EBITDA margin of… 13.5%, within the next five to 10 years.
Now, to put that perspective, last year Carvana sold a little more than 416,000 vehicles, EBITDA margin of 10.1%. So we’re talking about a huge jump in volume and a major uptick in profitability… I think they’re very much on the right track here. That makes it even more exciting for me… Given that these guys have come up with an incredibly convenient way to sell used cars, I bet they’ve got a lot more room to take market share… Remember why I recommended the stock in April, and… it wasn’t about busting shorts. That’s not the way we play it here.
As President Trump slaps more tariffs on foreign cars, Carvana’s used vehicles start to look a lot more enticing. When the White House announced these new 25% tariffs on auto imports from South Korea and Japan, well, that was very good news for this company… Historically, Carvana always bounces back. People have told me to short the stock… It’s not a way to be able to try to make money. You gotta have fundamental reasons to short.
Here’s the bottom line: I like Carvana for the long haul because I’m a true believer, but that doesn’t mean the stock will charge endlessly higher without taking some detours. In fact, I hope it gives you a big pullback because that will let you get back into the stock at a very nice discount. Never forget, Carvana’s built a best-in-class business model, and management’s on track to deliver both strong growth and rising profitability. If you don’t own it already, you do have my blessing to put on a small position here, then you gotta wait for the opportunity to buy some more on weakness only.”
A customer buying a used car with the help of a finance specialist.
Carvana Co. (NYSE:CVNA) runs an online platform for buying and selling used cars. It handles everything from inspection and financing to delivery and customer support. The company also operates vehicle auction sites and manages its own logistics network.
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Disclosure: None. This article is originally published at Insider Monkey.
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