Why Asbury Automotive Group, Inc. (ABG) Is Among the Best Car Repair Stocks to Invest In Now

Asbury Automotive Group, Inc. (ABG), a leading automotive retailer in the United States, has been making waves in the industry with its robust performance and strategic initiatives. With a strong focus on the Parts and Service segment, ABG has emerged as one of the best car repair stocks to invest in now. Let's delve into the reasons why ABG stands out in the automotive retail landscape and why it deserves a closer look from investors.



1. Resilience in the Parts and Service Segment

Asbury Automotive Group's Parts and Service segment has proven to be a resilient and steady source of profits, even in the face of challenges in the New Vehicle and Used Vehicle segments. During the fiscal third quarter of 2024, ABG delivered $4.2 billion in revenue, with the Parts and Service segment contributing significantly to this growth. The segment's gross profits improved by 16% year-over-year, neutralizing the overall gross margin decrease to only 142 bps year-over-year.

Madison Mid Cap Fund, which holds ABG in its portfolio, highlighted the company's ability to earn more profits from its parts and services segments during tough economic cycles. This is a testament to ABG's resilience and profitability in the Parts and Service segment, which is a key differentiator in the automotive retail industry.



2. Strong Revenue Growth

Asbury Automotive Group's revenue growth has been impressive, with a 16% year-over-year increase in the third quarter of 2024. This growth was driven by a 16% increase in new vehicle revenue and a 13% increase in the Parts and Service segment. The company's ability to maintain and even improve its Parts and Service segment profitability during challenging economic conditions further underscores its competitive advantage in this area.

3. Strategic Acquisitions and Expansion

ABG has expanded its footprint through strategic acquisitions, which have contributed to its revenue growth and dealership portfolio. As of September 30, 2024, Asbury operated 153 new vehicle dealerships, consisting of 202 franchises and representing 31 domestic and foreign brands of vehicles. This expansion has allowed Asbury to offer a wider range of automotive products and services to its customers, including new and used vehicles, parts and service, collision repair services, and finance and insurance products.



4. Capital Allocation Strategy

Asbury Automotive Group's capital allocation strategy, which includes share repurchases and investments in technology, contributes to its long-term growth prospects. The company has been actively engaged in share repurchases, which not only reduces the number of outstanding shares but also increases earnings per share (EPS) for remaining shareholders. Additionally, ABG has been investing in innovative technologies to improve operational efficiency and enhance the customer experience, such as the rollout of Tekion, a platform designed to improve productivity and reduce SG&A costs in the long term.



In conclusion, Asbury Automotive Group, Inc. (ABG) is among the best car repair stocks to invest in now, thanks to its resilient Parts and Service segment, strong revenue growth, strategic acquisitions, and effective capital allocation strategy. With its focus on innovation and customer experience, ABG is well-positioned to continue its growth trajectory and deliver value to shareholders. As the automotive industry evolves, ABG's commitment to adaptability and resilience makes it an attractive investment opportunity.