America's Car-Mart (NASDAQ: CRMT) operates
91 automotive dealerships, located primarily in the smaller urban markets of eight South-Central states. The dealerships focus on selling and providing the financing for basic, affordable cars, trucks and sport utility vehicles. Competitors include AutoNation (NYSE: AN) and CarMax (NYSE: KMX).
The company pleased investors late last month, when it reported fiscal Q4 EPS of 47 cents and revenues of $76.5 million. Analysts had been looking for 29 cents and $69.2 million. The firm said it was seeing increased traffic at its dealerships, as the cost of living rose. CL King subsequently upgraded CRMT shares from "accumulate" to "strong buy", noting management's improved execution in sales, underwriting, collections and purchasing. The company was expected to do well, in the current economic environment.
The stock
popped through significant moving average resistance on the news and then passed into a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with three "strong buys", one "buy" and one "hold". Analysts see a 19% growth rate, through the next year. The CRMT P/E ratio (14.92), PEG ratio (1.00), Price to Sales ratio (0.81), Price to Book ratio (1.61), Sales Growth rate (29.01%), EPS Growth rate (291.67%) and Return on Assets (8.04%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 70% of the outstanding shares. Over the past 52 weeks, the stock has traded between $9.02 and $19.69. A stop-loss of $16.75 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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