Group 1 Automotive, a leading operator in the highly fragmented $1 trillion automotive retailing industry, follows a strategy that focuses on decentralized management, new technology initiatives, expansion of higher-margin businesses, customer service, and centralization of certain administrative functions.
As of late February 2008, Group 1 owned and operated 104 automotive dealerships, 143 franchises, and 26 collision service centers in the U.S., and three dealerships, six franchises and two collision centers in the U.K. that offer 32 brands of automobiles.
Comments: Increased revenue from 1998 to 2006 yoy, each year, every year. Similar growth for net income, except for 2004, which must have suffered from a particularly large acquisition (guessing here, need to investigate). Good dividend: 2.7%. This is a "growth through gobble" company, and they appear very successful at that strategy. Brilliant fund managers Richard Fentin (Fidelity Value) and Joel Tillinghast (Fidelity Low Priced Stock) own large portions of GPI. Insiders were buying on the open market last year at higher prices. Fear seems to be dominating anything related to autos because of the dastardly recession. Trading for a ridiculous 7% of revenue and 64% of stated book value. What about the debt, you say? I'm not sure, but I guess it might seem inflated because of the way leases are recorded on the books, similar to why so many value-oriented investors think SNS is currently attractive despite the appearance of a large amount of debt. [more]
Inspired by the popular Eldrehad's Picks I decided to start my own alter-ego CAPS profile to pick one stock a month and track performance. PebbledsPicks will focus on a one-year holding period with an orientation toward value investing principles. I have read many times that the average stock trades within a 50% range within any 12-month rolling time period. Buying a decent company when the stock price has apparently been unfairly punished for any number of reasons and then selling at a profit within a reasonably short period of time (such as one year) is a formula for building wealth. No one ever went broke selling stocks for a profit. In this CAPS portfolio I will pick one stock a month with a modicum of due diligence and based on some simple fundamental analysis. My theory with this virtual portfolio is similar in philosophy to the BMW Method and Greenblatt's Magic Formula: buy decent companies when they appear to be cheap and then sell when you're up for a targeted CAGR. Try real hard not to sell at a loss if at all possible. [more]