Aside from valuation (19x forward) which apparently is no longer a valid reason to either not buy a stock or to sell one, I like the story of AutoNation (AN). Less competition is always a good thing - at least from a corporate standpoint. (Oct 1, 2008: Reuters - 1 in 5 Auto Dealers Could go Under by 2009) And if we do the "compartively it's cheap game" I suppose compared to some stocks being bought day after day on 50, 70, 90x FORWARD estimates it's cheap. But that game was popular in late 90s NASDAQ and it meant nothing other than we are happy to overpay for 1 stock relative to overpaying even more of another. The quandry here is what sort of multiple could this expand to? Are we willing to pay 28x for a car dealer? I guess since investors are willing to pay anything on most stocks nowadays, it's a rhetorcial.


Carmax ( ) is another name I've been watching for the better part of 2 quarters and I appear to be the only one whose heart drops at valuation, now at mid 30x forward estimates. These are not trailing estimates - these are forward estimates.... i.e. if you are willing to pay 25x trailing earnings in general you should ask for a discount go forward. Unless you're a V shape consumer recovery person.



Some of the recent run in these stocks is from bringing in 2010 auto buyers into Q3 2009, but as we normalize our auto volumes from 9M area (down from 16M) to something in the 11-13M range they should benefit. I have a short list of CEO's who I really enjoy, and Mike Jackson is one of them. (p.s.