Zacks Industry Rank Analysis Highlights: America's Car-Mart and Penske Auto Group

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Dec 18, 2014, 09:30 ET

CHICAGO, Dec. 18, 2014 /PRNewswire/ -- Stocks featured in this week's Zacks Industry Rank analysis include America's Car-Mart (Nasdaq:CRMT-Free Report)and Penske Auto Group (NYSE:PAG-Free Report).

Zacks Industry Rank Analysis is written by John Blank, PhD, Chief Equity Strategist, Zacks.com.

Head to the Car Lot for Xmas!

Is the U.S. consumer aware of global turmoil? According to the Zacks Industry Ranks, the answer is clearly 'Not Really.' Consumer discretionary/cyclical stocks remain firmly on a momentum-driven roll.

A plethora of good fundamental reasons stand behind the consumer spending ebullience and the related U.S. stock-trading momentum. Jobs are more plentiful than they have been in years. The 401(k) portfolio has fully recovered, and then some. Retail gas-at-the-pump prices haven't been this low in over five years. Five-year-term consumer finance interest rates have gone from being low to going even lower.

That kind of clean sweep in the 'good news' category for cyclical industry fundamentals makes one want to shop for a car. That is exactly what is happening in the U.S. and the U.K.

Stock investors who have been wise to the auto-buying trend have profited handsomely. The Retail/Wholesale Auto and Truck industry stayed on a tear this quarter. This 9-company industry has just reached a top Zacks Industry Rank of #14 out of 265 industries we organize, with a +14 slot industry upgrade in the last week alone. What's behind the upgrade? Over the last week, there have been 4 positive analyst revisions compared to just 1 negative revision for this industry.

Why don't you head to the "Car Lot" yourself for some Xmas share buying cheer? You might even get a free glass of eggnog at one of the following top Zacks Ranked auto dealerships.

Zacks #1 Rank Company to Consider:

America's Car-Mart (Nasdaq:CRMT-Free Report) operates automotive dealerships and is one of the largest automotive retailers in the US focused exclusively on "Buy Here/Pay Here" segment of the used car market. The company operates its dealerships primarily in small cities and rural locations throughout the South Central U.S., selling quality used vehicles and providing financing for substantially all of its customers.

This is a small-cap blend stock with a Zacks #1 Rank (Strong Buy). On the growth side, EPS growth for 2015 is +16% on revenue growth of +8% annually. As to value, the Price to Sales ratio is a low 0.9. The consensus annual EPS has gone up +13% on both 2015 and 2016 estimates in the last 30 days. The stock is trading around $50.

CRMT reports earnings again on February 17, 2015.

Zacks #2 Rank Company to Consider:

Penske Auto Group (NYSE:PAG-Free Report) is based in Bloomfield Hills, MI. It was established in 1980. Today, it is the second largest auto retailer in the U.S. As of June 30, 2014, the company operated 177 franchises in the U.S. and 147 franchises outside the U.S., primarily in the U.K. Also, the company offers 35 brands.

This is a large-cap blend stock with a Zacks #2 Rank (Buy). Penske Auto's Q2 2014 EPS improved +27% to $0.89, surpassing the Zacks consensus estimate by $0.02. Revenues grew +21% y/y to $4.4 billion, surpassing the Zacks consensus estimate of $4.25 billion. There is a 1.9% dividend yield on offer here. The forward 12-month P/E ratio for 2015 is a sound 14.62, with a PEG ratio of 1.09. The stock is trading around $47.

PAG reports earnings again on February 12, 2015.

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