5 Vehicles and Parts Companies With High Business Quality

Stocks to consider as used cars and truck prices surge

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James Li
Jun 10, 2021

Summary

  • Consumer price index accelerated in May at a pace not seen for over 10 years.
  • New autos index hits highest single-month gain since October 2009.
  • The All-in-One Screener listed several vehicles and parts companies with high business quality.
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As consumer prices increase in May at a pace not seen since 2008, five vehicles and parts companies as of Thursday with high financial strength and profitability are America’s Car-Mart Inc. (

CRMT, Financial), Fox Factory Holding Corp. (FOXF, Financial), Marine Products Corp. (MPX, Financial), Standard Motor Products Inc. (SMP, Financial) and XPEL Inc. (XPEL, Financial) according to the All-in-One Screener, a Premium feature of GuruFocus.

The U.S. Bureau of Labor Statistics reported that the consumer price index increased 0.6% in May on a seasonally adjusted basis following a 0.8% increase in April. Over the past 12 months, the index surged 5% before seasonal adjustment, up from the Dow Jones consensus estimate of a 4.7% increase and the largest 12-month increase since the 5.4% gain during the period ending August 2008.

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The Labor Department further said that the index for used cars and trucks soared 7.3% in May, representing approximately one-third of the all items increase. Over the past 12 months, the used cars and trucks index accelerated 29.70% while the new vehicles index climbed 3.3%, its highest increase since November 2011.

As such, investors may find opportunities in high-quality vehicles and parts companies. GuruFocus’ All-in-One Screener listed five companies that have a financial strength rank of at least 6, a profitability rank of at least 7, a business predictability rank of at least three stars and five-year average operating margin growth of at least 1%.

America’s Car-Mart

America’s Car-Mart (

CRMT, Financial) sells used cars and provides financing for customers. GuruFocus ranks the Rogers, Arkansas-based company’s ' rel='nofollow' target='_blank'>profitability 8 out of 10 on several positive investing signs, which include a three-star ' rel='nofollow' target='_blank'>business predictability rank, a ' rel='nofollow' target='_blank'>return on assets that outperforms over 90% of global competitors and an operating margin that has increased approximately 9.4% per year on average over the past five years.

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Chuck Royce (Trades, Portfolio)’s Royce Investment Partners has a holding in America’s Car-Mart.

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Fox Factory Holding

Fox Factory Holding (

FOXF, Financial) designs, manufactures and markets performance-defining products and systems primarily used on bikes and other types of vehicles. GuruFocus ranks the Braselton, Georgia-based company’s profitability 9 out of 10 on several positive investing signs, which include a four-star business predictability rank and an operating margin that has increased approximately 3.10% per year on average over the past five years and outperforms more than 90% of global competitors.

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Gurus with holdings in Fox Factory Holding include Ron Baron (Trades, Portfolio)’s Baron Funds and Pioneer Investments (Trades, Portfolio).

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Marine Products

Marine Products (

MPX, Financial) manufactures, distributes and markets fiberglass motorized boats through its independent dealer network. GuruFocus ranks the Atlanta-based company’s financial strength 9 out of 10 on several positive investing signs, which include no long-term debt and a double-digit Altman Z-score.

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Marine Products’ profitability ranks 8 out of 10 on the back of operating margins increasing approximately 2.3% per year on average over the past five years and outperforming more than 80% of global competitors.

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Standard Motor Products

Standard Motor Products (

SMP, Financial) manufactures and distributes replacement parts for motor vehicles, focusing on engine management and temperature control. GuruFocus ranks the Long Island City, New York-based company’s profitability 8 out of 10 on several positive investing signs, which include a perfect Piotroski F-score of 9, a 4.5-star business predictability rank and an operating margin that has increased approximately 1.9% per year on average over the past five years and outperforms more than 80% of global competitors.

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XPEL

XPEL (

XPEL, Financial) provides a wide range of automotive paint protection films and automotive window films. GuruFocus ranks the San Antonio, Texas-based company’s profitability 10 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank and an operating margin that has increased more than 10% per year on average over the past five years and is outperforming over 90% of global competitors.

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Disclosures

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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