There are plays that work out, and then there are standout plays. In December 2010, Monro Muffler Brake (MNRO), announced a 3-for-2 stock split, which brought the trade's entry point down to $17.33 ($26.01 pre-split).

Meanwhile, auto repair chain Monro remains on a roll: the shares pulled back following the split, but have since recovered some of the ground, to about $33, and now may be a good time to consider taking some profits off the table.

Auto parts chain giant O'Reilly Automotive (ORLY), which I first wrote about here on May 18, 2009, at a price of $37.02, may represent the play of the year.

O'Reilly recently took out $60 resistance, and will likely head higher, but it's thoroughly understandable if those who bought in at $37 want to take some profits off the table at this stage.

However, those who can tolerate the risk can retain their full position and go for an even bigger gain with ORLY.

Auto parts chain AutoZone Inc. (AZO), which I first discussed here on March 30, 2009, at a price of $163.40, appears to be back on the move.

Look for AutoZone to post 2010 revenue growth of 4% to 6%, boosted by both same store sales growth and the addition of about 180 new stores. Margins should widen.

AutoZone is benefiting from a recession-related trend: Adults unable to buy new cars are maintaining their existing used cars; others are purchasing used cars instead of new ones; both these practices are bullish for AZO.

The uptrend for Monro Muffler Brake (MNRO), first discussed here on March 27, 2009, at a price of $26.01, continues. It goes without saying that the auto/vehicle repair sector's fundamentals and conditions remain favorable for MNRO.

Pinched budgets mean new car sales will not return to normal levels any time soon, which means many Americans will be driving their 5-year and 8-year used cars longer, and that means increased maintenance: to Monro's benefit. Ditto for the trend regarding used car purchases instead of new car purchases. Hence, look for Monro's revenue to increase 10-15% in both 2010 and 2011.

Advance Auto Parts (AAP), which I first wrote about on May 19, 2009, at a price of $43.38, is a company I still like, for several reasons.

Look for AAP's revenue to increase a healthy 6% to 8% in FY2010, driven by both same store sales gains and the opening of about 100 new stores.

The stock of The Goodyear Tire & Rubber Company (GT), which I first wrote about on May 5, 2009, at a price of $13.30, has given back most of the gains registered in 2009, but I still like the company's business model and prospects, for several reasons.

First and foremost, it appears the long auto sector depression in the U.S. is over: miles driven fell substantially in 2009, due to fewer drivers and consumer belt-tightening. Further, while no one should expect 1960s-style suburban traffic growth, last year's negative mileage pattern is unlikely to be repeated in 2010.

With so many people rushing out to take advantage of the "cash for clunkers" program, American auto maker Ford Motor (NYSE: F) has announced that it will be significantly boosting fourth quarter production.

There has been a lot of debate over whether or not the "cash for clunkers" program is good for the economy, but there is little debate as to its popularity. The program offers up to a $4,500 incentive for people exchanging their old gas guzzlers in for newer, more fuel efficient vehicles, and has been much more popular than anyone could have imagined.

The cash-for-clunkers deal has been getting a lot of coverage, and I hate it. I hate the program because I think it's bad for America, will lead to financial problems for the vast majority of people who participate in it, and won't help to solve the economic crisis.

First, a quick recap of how it works: You trade in your old car that gets low mileage and you get a taxpayer-funded rebate of up to $4,500 off the price of a new car. The rebate is $3,500 if the spread in fuel efficiency between the old car and the new car is smaller. In order to get the rebate, your old car has to be junked. In other words, this is not a deal that someone with a car worth more than $3,500 or $4,500 would take.

CarMax (NYSE: KMX), an expert in used automobiles and a colleague of AutoNation (NYSE: AN), is up today nearly 14% in early-afternoon trading on spectacular volume. What's driving (pun intended!) the buying action? You guessed it...earnings. Revenues for the first quarter decreased 17%. Adjusting for items, CarMax earned $0.22 per share, and, according to my colleague Melly Alazraki, that figure simply annihilated earnings projections developed by the analysts.

Well, well, well...what to do now, right? CarMax is an interesting company in an interesting time. It sells used cars during a period when new cars aren't selling too well. We all know about the problems at Ford (NYSE: F) and General Motors (OTC: GMGMQ). But that isn't reason enough to put money down on this stock. Especially not after a rally like we're seeing today.

The resale value of Toyota (NYSE: TM) cars is usually pretty good. They are admired for their quality and durability. So when the big Japanese company says it will have to write down the value of many of its leased vehicles, it is an indication that the auto industry's troubles in the U.S. are getting worse.

According to The Wall Street Journal, "the company will set aside major reserves for its first quarter to cover losses from vehicle leases in the U.S." Toyota's first quarter ended June 30.

The news is a signal that a severe problem within the car industry is widening. Leased vehicles are often coming back to car companies with so little value that they cannot be resold for enough money to reclaim a reasonable part of their original prices. The difference has to be written off. The trouble is especially acute with SUVs and pick-ups because their fuel-efficiency makes them unattractive.

The problem has a domino effect. The leased cars coming back are sold as used. Their prices have been undermined by the current U.S. economy and gas prices, and the vehicles are marketed at deep discounts. That often makes them attractive alternatives to new cars. And, since the auto companies are already having trouble selling new cars, their problems are compounded.

Toyota's news may be bad for Toyota, but it is worse for the the industry as a whole.

Douglas A. McIntyre is an editor at 247wallst.com.

Headquartered in Bentonville, Arkansas, world capital of Wal-Mart, America's Car-Mart Incorporated (NASDAQ: CRMT) has taken a page from master marketer Sam Walton.

America's Car-Mart will make it possible for just about anyone with weak or limited credit history to purchase a basic, reliable used car. No money for the down payment? No problem. America's Car-Mart will accept anything of value, including furniture, electronics and even livestock, as part of the down payment. This approach seems to be working. At a time when Car-Max (NYSE: KMX) posted a 55% drop in earnings, America's Car-Mart posted 4Q 2008 revenue gain of 29% to $76.5 million. Gross margins are up, past due accounts are down (surprising in a tight rural economy), net income is way up, and the company's debt level is down. Retail sales by unit volume increased 25% despite the fact the company closed three underperforming dealerships in the quarter. The average retail sales price increased 7% and the company has worked hard to improve the quality of the used vehicles in its inventory.

These good numbers are not just a fluke for 4Q 2008. FY 2008 revenues are up 14% to $275 million. Net income totaled $15 million or $1.26 per diluted share. The company has invested in software to track loan delinquencies and has developed its own proprietary credit scoring method to serve its non-traditional client base. Investors are happy with the news. They bid the stock up more than 5% to close at $18.86, closing in on the stock's 52 week high.

CarMax Inc. (NYSE: KMX) is getting squeezed by its own rising cost of borrowing money to finance consumer vehicle purchases, weakening consumer demand spreading across the board, declining customer traffic into sales locations, lower gross profit margins per vehicle, and rapidly accelerating declines in the resale prices of trucks, SUVs and other gas hogs already parked on its lots. All these factors mean that CarMax 1Q FY2009 EPS dropped to $0.13, down 55% from 1Q FY2008.

Don't look for improvement in any external factors in the near future. Nevertheless, CarMax senior management has decided to continue with its aggressive expansion program in order to gain market share across the country. Thus far, CarMax has opened six new used car superstores in 2008 with plans to open eight more. The company is also testing a program to centralize its appraisal and car buying programs into five car-buying centers spread throughout the country. CarMax hopes to obtain more of its used vehicles for resale directly from consumers rather than wholesale auto auctions. The profit margin is higher for CarMax on vehicles obtained directly from consumers.

CEO Tom Folliard has suspended guidance for the rest of FY2009 given so many broad-based economic uncertainties, including continued uncertainty in the subprime lending sector. CarMax's income from financing declined $27 million to $9.8 million in 1Q FY2009. The company is facing higher funding costs and higher loss assumptions. Presently the stock is trading right around $16, but will face an uphill battle just to stay in that price range.

There's a lot of chatter around the blogosphere discussing a formally announced agreement between eBay (NASDAQ: EBAY) and General Motors Corp. (NYSE: GM). I picked up on the official GM press release at Autoblog.

Here's what I make of it: GM will be placing all of its available GM certified, used car inventory from 3,900 dealers on eBay in the classified ad format. I believe this means that people won't actually be bidding for the cars on eBay, but they will be able to look at them there, and then they will be referred to the dealership that has the car they want. It may be similar to the way Craigslist operates. You know, Craigslist . . . an eBay company.

The GM press release states: "The eBay Motors agreement means that GM Certified dealers will have millions more eyeballs looking at their inventory, and more traffic drives sales," said Mark Mathews, director, GM Used Vehicle Activities. "Teaming with eBay Motors provides shoppers with convenient access to all GM Certified inventory and continues GM Certified's commitment to interactive marketing. We now offer our dealers the most comprehensive program in the industry, listing their inventory on more than 300 websites."

We Americans are a funny lot. In another era, we valued thrift and fiscal conservatism. But no longer. These days we're all living La Vida Loca in the consumer economy.

Yep. We love to spend. And although there are some ominous signs on the horizon that the party may be coming to a close, the party ain't over yet. In the spirit of fun, AOL has a new feature celebrating the vices that represent the best ways to part with your hard-earned dollars. I couldn't help but agree with many of them. I opine on some additional money-wasters below:

Bottled Water
It's water. And last year we spent more on it than on iPods and movie tickets. This Fast Company piece says it all. Thirty years ago, the article says, bottled water was a blip on the business screen in this country. But tastes change, apparently. Last year, Americans spent some $15 billion on bottled water, from Poland Spring to upscale Fiji Water. The Coca-Cola Co.'s (NYSE: KO) Dasani and PepsiCo's (NYSE: PEP) Aquafina, the top-two bottled waters in the country, are admittedly just purified - and nicely-packaged tap water!

Cable - You're paying how much for cable each month? And you're getting....2,000 channels of crap, plus maybe some decent sports now and then. The cable companies promise something for everyone, but you still have to wade through somebody else's definition of entertainment to find your own. There's no bigger waste of time or money. You might be amazed at how much entertainment you can rent cheaply on DVDs, or even download from the internets. Try going to your favorite sports bar for the ESPN offerings you feel you can't miss, and enjoy them with like-minded buddies. Even more un-American? Try getting rid of your cable and availing yourself of all that sudden free time.

New Cars
Yeah, yeah we all love that new car smell, but that's about all you're getting when you plunk down your cash for a brand new vehicle. According to Edmunds.com, the average new care loses 12.2% of its value in the first year. Some cars depreciate even faster. A one or two-year-old vehicle can cost thousands less and still offer low mileage and reliability. It'll look good, too. And nobody ever needs to know you didn't buy it new off the lot. Now breath deep: Smell that? It's the scent of a good deal.

CarMax Inc. (NYSE:KMX) had a profit in its latest quarter. A big one. The company even moved up its forecast for the next fiscal year.

CarMax made a profit of $45 million, up from $23 million in the same quarter last year. Revenue rose 24% to $1.77 billion. Gross profit on the used cars sold by CarMax is well above the gross profit on new cars: $1,898 versus $1,108.

The company said that Internet traffic, luxury car demand, and a return of SUV buyers as gas prices dropped helped increase sales. CarMax stock hit a record high of $52.77.

But, that's all yesterday's news. What does it mean?

CarMax is the largest retailer of used cars in the U.S. Oddly enough, the small new vehicle business at CarMax has dropped 3% to $110 million, while the used-car revenue rose 27% to $1.378 billion.

Another clue is that Detroit says that the average price that it's getting per vehicle is dropping. Incentives for some DaimlerChrysler's (NYSE:DCX) Chrysler models are over $4,000 a car, and General Motors Corp. (NYSE:GM) and Ford Motor Co. (NYSE:F) are not doing much better.

Consumers do not want to pay retail prices or anywhere near it for a car. Perhaps it's concern about the economy. Perhaps it's concern about the value of their homes. Perhaps research and Internet initiatives like Consumer Reports and JP Powers have convinced buyers that the right used car is virtually as good as most new ones.

CarMax results are not good for Detroit. When people buy used, new cars pile up.

Douglas A. McIntyre is a partner at 24/7 Wall St.