Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Retailers - Auto Vehicles, Parts & Service industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Retailers - Auto Vehicles, Parts & Service Stock News

Before choosing which top Retailers - Auto Vehicles, Parts & Service stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The 12-month fundamental outlook for the Automotive Retailers industry is positive, reflecting expectations for a sharp recovery in sales volume in China, Europe, and the U.S. (which together account for over 70% of global vehicle sales) in 2021 from the depressed, Covid-19- impacted levels of 2020, balanced by an expectation that overall demand will fall short of returning to pre-pandemic levels. Auto retailers’ sales volumes should rebound sharply and cost cuts implemented in 2020 should help boost margins. Aftermarket retailers are benefiting from strong repair and maintenance demand due to the record-high U.S. vehicle age (12.1 years) and trends favoring the purchase of used vehicles versus new vehicles going forward. We estimate U.S. light vehicle sales will rebound by 16.2% to 16.8 million units in 2021 from the 2020 total of 14.46 million (-15.5% Y/Y). Still, we expect U.S. light vehicle sales to come in slightly below the pre-pandemic level of 16.95 million units in 2019. Sales would be stronger if not for the low inventory levels and parts shortages (particularly semiconductors) which have plagued the market for most of this year. In 2020, U.S. light vehicle sales posted their weakest total since coming in at 14.44 million units in 2012. On the positive side, rebounding GDP, consumer stimulus, declining unemployment, and low interest rates should help support sales volumes. Currency swings could also possibly benefit companies with significant non-U.S. manufacturing exposure if the U.S. dollar continues its recent depreciation versus other major currencies. We think margins will benefit from a combination of significantly higher price realizations and draconian cost cuts implemented in 2020. Increased production should also help with fixed cost absorption, but rising labor and raw materials costs are growing concerns.

Why Focus on Undervalued Retailers - Auto Vehicles, Parts & Service Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Retailers - Auto Vehicles, Parts & Service Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Retailers - Auto Vehicles, Parts & Service industry for Tuesday, August 01, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Retailers - Auto Vehicles, Parts & Service industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Cazoo Group Ltd’s Value Grade

Value Grade:

Cazoo Group Ltd (Cazoo) is a United Kingdom-based independent online car retailer. The Company allows customers to buy, sell, finance to a car entirely online for delivery or collection. The Company's end-to-end digital platform offers customers in the United Kingdom a choice of used vehicles of different makes and models for acquisition, and to sell their car without an obligation to buy a car from the Company. Other options available to the customer include part-exchanging their vehicle as a form of partial payment for a Cazoo car, as well as options to finance a car purchase. The Company acquires its used vehicle inventory from a variety of sources, including used-car auctions, corporate suppliers such as vehicle finance, leasing, and rental companies, as well as directly from consumers. It works with partners such as Black Horse, BNP Paribas, Santander and Evolution Funding (a broker with a panel of different lenders) to offer its customers the ability to finance their Cazoo car.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Cazoo Group Ltd has a Value Score of 86, which is considered to be undervalued.

When you look at Cazoo Group Ltd’s price-to-sales ratio at 0.04 compared to the industry median at 0.41, this company has a lower price relative to revenue compared to its peers. This could make Cazoo Group Ltd’s stock more attractive for value investors.

Now, let’s assess Cazoo Group Ltd’s EV/EBITDA ratio, also known as enterprise multiple. At 14.0, when compared to the industry median of 9.0, the company may be considered overvalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Cazoo Group Ltd’s price-to-book ratio is lower than its industry median ratio of 1.88. This could make Cazoo Group Ltd more attractive to investors looking for a new addition to their portfolio.

Openlane Inc’s Value Grade

Value Grade:

OPENLANE, Inc., formerly KAR Auction Services, Inc., provides sellers and buyers across the global wholesale used-vehicle industry with remarketing solutions. The Company's end-to-end platform supports whole car, financing, logistics, and other ancillary and related services. It operates in two business segments: Marketplace and Finance. Its vehicles on the Company's marketplaces are sold by commercial sellers, including vehicle manufacturers and their captive finance companies, financial institutions, commercial fleet operators and rental car companies, as well as used vehicle dealers, to franchised and independent used vehicle dealers. Its OPENLANE platform supports 40 private label digital remarketing sites. For dealer customers, the Company also operates BacklotCars and TradeRev digital marketplace platforms that facilitate real-time transactions between automotive dealers, coast-to-coast in the United States and Canada. It operates the ADESA Simulcast and Simulcast+ technology.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Openlane Inc has a Value Score of 61, which is considered to be undervalued.

Openlane Inc’s price-earnings ratio is 510.1 compared to the industry median at 14.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Openlane Inc less attractive for value investors.

Openlane Inc’s price-to-book ratio is higher than its peers. This could make Openlane Inc less attractive for value investors when compared to the industry median at 1.88.

You can read more about Openlane Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Rush Enterprises Inc’s Value Grade

Value Grade:

Rush Enterprises, Inc. is an integrated retailer of commercial vehicles and related services. The Company operates through the Truck Segment, which includes its operation of a network of commercial vehicle dealerships under the name Rush Truck Centers. Rush Truck Centers primarily sell commercial vehicles manufactured by Peterbilt, International, Hino, Ford, Isuzu, IC Bus and Blue Bird. Through its network of Rush Truck Centers, the Company provides one-stop service for the needs of its commercial vehicle customers, including retail sales of new and used commercial vehicles, aftermarket parts sales, service and repair facilities, financing, leasing and rental, and insurance products. It operates approximately 125 franchised Rush Truck Centers in 23 states. The Company also owns and operates 15 international dealership locations in Ontario. It provides aftermarket parts, service and body shop operations plus financing, insurance, leasing and rental, and chrome accessories and tires.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Rush Enterprises Inc has a Value Score of 62, which is considered to be undervalued.

Rush Enterprises Inc’s price-earnings ratio is 9.7 compared to the industry median at 14.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Rush Enterprises Inc more attractive for value investors.

Rush Enterprises Inc’s price-to-book ratio is lower than its peers. This could make Rush Enterprises Inc more attractive for value investors when compared to the industry median at 1.88.

You can read more about Rush Enterprises Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Retailers - Auto Vehicles, Parts & Service Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Retailers - Auto Vehicles, Parts & Service stocks as well as other industrys.

Choosing Which of the 3 Best Retailers - Auto Vehicles, Parts & Service Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Cazoo Group Ltd stock has a Value Grade of A.
• Openlane Inc stock has a Value Grade of B.
• Rush Enterprises Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the Retailers - Auto Vehicles, Parts & Service industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Retailers - Auto Vehicles, Parts & Service Stocks

Want to learn more about Retailers - Auto Vehicles, Parts & Service stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Retailers - Auto Vehicles, Parts & Service Stocks for Tuesday, August 01
• What You Need to Know About Sonic Automotive Inc's Q2 Earnings
• 4 Undervalued Retailers - Auto Vehicles, Parts & Service Stocks for Monday, July 31
• What You Need to Know About Group 1 Automotive, Inc.'s Q2 Earnings

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