AutoNation's Stock Price Reflects Great Management And Execution

AutoNation, Inc. (AN) is the largest automotive retailer in the United States and we first became interested in the stock during the Great Recession. During that tumultuous experience and the subsequent bankruptcies of General Motors (GM) and Chrysler, the automotive retailer industry was in dire straits. We were buyers of the stock during that time and at one point AutoNation's stock traded below $4 for a short period. Ultimately we ended up selling way too early on the upswing, as AutoNation's extremely strong management team headed by CEO Mike Jackson came out of the crisis far stronger than before, while profits and the stock price have continued to increase. AutoNation's stock doesn't appear to offer an excellent value at current prices in excess of $40 per share, but understanding the business and management team could prove profitable during the next recession or economic crisis if shares once again become oversold due to external events.

As of September 30, 2012, AutoNation owned and operated 261 new vehicle franchises from 215 stores located primarily in the Sunbelt regions of the United States. The company is highly exposed to the regions that were hurt the hardest from the collapse in housing prices, as historically buyers would use resources such as home equity to fund large-ticket purchases such as automobiles.


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