Lithia Motors Inc (LAD), Penske Automotive Group, Inc. (PAG), AutoNation, Inc. (AN): 3 Car Dealers Set to Ride The Recovery

Analysts expect the company to deliver an average annual growth rate of around 17% to 18% over the next five years.  Its plan for expansion is a reason for this optimism.  As the industry becomes more competitive, Penske Automotive Group, Inc. (NYSE:PAG)should be able to acquire several smaller luxury dealers.

Overseas expansion is also worth mentioning. Recently, Penske Automotive Group, Inc. (NYSE:PAG) entered the North Irish and Italian markets, adding diversity to its geographic base. International expansion could be a real wild card.

With a 1.9% dividend and a stock buyback program, Penske Automotive Group, Inc. (NYSE:PAG) consistently returns cash to shareholders.  It’s earnings multiple around 13 makes it the cheapest of the 3 dealers.  In fact, it’s only trading at .2 times sales.

Bottom line

All of the above retailers are interesting, but Lithia Motors Inc (NYSE:LAD) Motors may just be the best of the bunch.  Its knack for setting up shop in less competitive areas sets it apart from its peer’s.  Its strong margins, growth prospects, and smart management makes it worth a closer look.

The article 3 Car Dealers Set to Ride The Recovery originally appeared on Fool.com and is written by Damian Illia.

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