IBD Stock Analysis
- Near 125.31 cup-base buy point
- Could be starting to work on a handle
- Relative strength line already at record high
Industry Group Ranking
* Not real-time data. All data shown was captured at
1:21PM EDT on
AutoNation (AN) is the IBD Stock Of The Day, as the Fort Lauderdale, Fla.-based auto retailer announced industry veteran Michael Manley as its new chief executive. AutoNation stock is near a buy point, with some rival auto dealers also in or near buy zones.
Manley, who had been Stellantis (STLA) chief executive for North America, will take the helm at AutoNation on Nov. 1. He replaces Michael Jackson.
“After 20 incredible, challenging and enjoyable years, and with Stellantis performing so strongly under Carlos’ (Tavares) leadership, the time feels right for me to open a new chapter,” Manley said in a statement.
AutoNation owns and operates over 300 locations across the U.S. as of June 30. It sells and leases new and used cars as well as automotive products.
Pandemic-related trends have fueled sales and profits at AutoNation. In the second quarter, AutoNation earnings shot up 243% vs. the year-ago quarter to $4.83 per share, handily beating consensus estimates for $2.85. Sales jumped 54% to $6.98 billion in the same period.
“The Covid-19 pandemic caused a dramatic shift in consumer spending priorities,” said Jackson in a conference call with investors after Q2 earnings. “And with bigger homes and the safety and convenience of personal transportation combined with low interest rates, this strong vehicle demand has led to faster inventory turnover and consumers are buying vehicles before they even arrive at our stores.”
Jackson added he expects the current environment of demand exceeding supply to continue into 2022.
Chip shortages and other supply-chain woes have forced automakers worldwide to slash production targets. That has sent used-car prices soaring.
Shares rose 1.9% to 121.09 on the stock market today. AutoNation stock is closing in on a cup-base buy point of 125.31, according to MarketSmith chart analysis. Shares could be starting a handle. That would be a positive, given that AN stock has rallied quickly from the bottom of the base.
AutoNation stock’s relative strength line is rising and at a new high. The RS line, the blue line in the chart provided, tracks a stock’s performance vs. the S&P 500 index. An RS line hitting new highs before the stock is especially bullish.
With a Composite Rating of 99, AN stock is ranked No. 1 in IBD’s retail/wholesale-automotive industry group.
“We think what really sets AN apart from competitors is the company’s pace of stock buybacks — AN repurchased 7.5M shares for $736M in Q2, a staggering 9% of shares outstanding,” CFRA Research analyst Garrett Nelson said. “AN has repurchased 15% of its outstanding share count since the beginning of 2021.”
Rival CarMax (KMX) fell 0.9% to 136.98. KMX is also right around buy point of 140.05 from a cup base.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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