AutoNation stock has attracted some sneaky bidders

The indicators direct retail and professional traders to the right places to consider an investment. Today, a specific branch of the manufacturing sector has attracted much of the market’s attention, offering you the highest chances of making a decent profit in the coming months. But more on that shortly.

You will soon discover why the automotive industry could be the one that will soon attract all the investment dollars, answering the calls explicitly launched by recent developments in AutoNation Inc. NYSE:AN stock lately. The industry has been through a bit of a dark time during the United Auto Workers (UAW) strikes over the past two quarters and the rise in auto loan defaults, but today things have changed.

There aren’t many competitors who could offer the kind of discount and advantage that AutoNation offers you today, no O’Reilly Automotive Inc. NASDAQ:ORLY OR AutoZone Inc. NYSE: AZO. Your job today is to translate the market’s encrypted message regarding where AutoNation stock stands today and what that means for the future stock price, all to the benefit of your portfolio if you consider it a worthy addition.

Gear in a car

Professional traders at large banks, those who operate at similar companies The Goldman Sachs Group NYSE:GSthey tend to follow a systematic process to find stocks to invest their money in.

You can define this initial phase as a “top-down” analysis, which seeks to break down trends in the economy and specific sectors, finding outliers with high probabilities of significant movement. You too can follow in their footsteps by looking at one of these economic indicators, the ISM manufacturing PMI index.

You should look specifically at the transportation equipment industry, which includes auto parts wholesale, where AutoNation shines. In November and December of the last quarter, this sector contracted, then entered a new expansion in January at the beginning of the year.

Likewise, according to the jobs report, the auto and parts industry added 3,100 jobs over the past month, while the U.S. economy created 353,000 jobs.

Goldman analysts themselves have openly expressed their expectations of seeing a turnaround in the manufacturing sector this year; you can check their thesis in this 2024 macro outlook report.

Sponsored by potential interest rate cuts by the Federal Reserve (Fed) this year, a new monetary cycle could also spur activity in the sector. Executives from the PMI’s responding section also said the industry is “trying to recover” after the negative effects experienced by the UAW strikes subside.

You are with a winner

Understanding that AutoNation has underperformed AutoZone and O’Reilly by as much as 12% over the past 12 months is only half the story. The fact that the stock needs to recover is just one of many reasons for buyers to sneak into the stock for the long side.

Analysts may still be clinging to the gloom of the past, as they still expect earnings per share to decline 12.7% over the next 12 months, all while AutoZone and O’Reilly are expecting advances of 9.5% and 10% respectively. .6% for the next 12 months. year.

The fact is that whale insider investors are pushing stocks higher in other places, betting on more optimistic outlooks to come from analysts. The markets cannot hide the evidence that can be found in how these stocks are priced, particularly their price-to-book ratios, which show how much the markets are willing to pay for every dollar of capital invested in the company.

At 2.8x, AutoNation commands an 88% premium over its competitor, AutoZone.

O’Reilly’s debts are more significant than its net worth, so you can’t even value this stock in that sense.

Analysts might also be hinting at their new views on the stock, realizing that its gap in price action, plus how markets perceive its value, are two good enough reasons to assign a per-share price target of 175 $.10, prompting a 13.8% rally from where the shares trade today.

O’Reilly analysts see just 2.9% upside in their targets, while AutoZone’s $2,857 price target gives you 5.7% upside.

Before you consider O’Reilly Automotive, you’ll want to hear this.

MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and O’Reilly Automotive wasn’t on the list.

While O’Reilly Automotive currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.

View the five stocks here