There was good news for the automotive industry last week, although you couldn’t tell it by the way the stocks of the major automobile manufacturers traded. On the day that most of the nation’s leading publications reported that vehicle sales for March enjoyed the best monthly sales numbers in five years, shares of Ford (F) traded down 14 cents to $12.51 (1.07 percent), General Motors (GM) was down 44 cents to $25.10(1.72 percent) and Toyota traded down $2.62 to $83.60 (3.04 percent).
A total of 1.4 million vehicles were sold in March, 12.7 percent more than in March 2011, according to a Los Angeles
Times story (http://www.latimes.com/business/autos/la-fi-autos-sales-20120404,0,331195.story) under a headline “Vehicle Sales Are Burning Rubber.” The Times story noted that this was the best month for auto sales since August 2007 when 1.47 million vehicles were sold.
For investors not ready to buy into the rebound of the big automotive manufacturers, perhaps the small cap auto dealership stocks might be worth a look. At least that was the theme of an April 4 Forbes article headlined “Still Queasy About Auto Company Stocks? Buy Dealerships Instead” (http://www.forbes.com/sites/joannmuller/2012/04/04/still-queasy-about-auto-company-stocks-buy-dealerships-instead/?partner=yahootix).
Duluth, GA-based Asbury Automotive Group (NYSE: ABG, http://www.asburyauto.com) operates 79 auto dealerships in 18 metropolitan markets in 10 states. More than half of the dealerships are Toyota or Honda dealerships. Buckingham Research upgraded Asbury from neutral to buy and the stock jumped on April 3 4.9 percent to $28.62. At mid-day April 9 ABG was tradingng down 96 cents to $26.84. ABG has a market cap of $851 million and a 52-week range of $14.96-$28.90.
Bentonville, AR-based America’s Car Mart (Nasdaq: CRMT, http://www.car-mart.com) sells older model used vehicles and vehicle financing. In March CRMT announced it had opened a dealership in Tupelo, Mississippi, its 113th dealership (located in nine states) and the seventh new dealership added in Fiscal 2012. At mid-day April 9 CRMT had traded about 7,500 shares and was down 85 cents to $43.97. CRMT’s market cap is $422 million and 52-week range is $23.73-$48.24.
Houston-based Group 1 Automotive (NYSE: GPI, http://www.group1auto.com) sells new and used cars, light trucks and auto parts, vehicle financing and insurance. It owns and operates 131 franchises offering 31 automobile brands with 104 dealership locations, 25 collision centers in the U.S. and an additional five dealerships and three collision centers in the UK. GPI just bought a Hyundai dealership in Kansas City on March 30. Buckingham Research also upgraded GPI to a buy this week and the stock initially responded, rising 3.9 percent to $59.15 on April 3. It backed off April 4 and April 5 and continued to do so at mid-day April 9, trading at $56.95, down $1.14 so far for the day. GPI’s market cap is $1.23 billion and 52-week range is $33.31-$59.97.