For most investors, how important the price of a stock changes over time is. This factor can affect your investment portfolio and help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and stocks popular with consumers.
What if you had invested in Lithia Motors (LAD) ten years ago? It might not have been easy to hold onto LAD all this time, but if it was, how much would your investment be worth today?
Deepening of Lithia Motors’ activities
With that in mind, let’s take a look at the main business drivers of Lithia Motors.
Lithia Motors, Inc. is a leading automotive retailer of new and used vehicles and related services in the United States. As of December 31, 2020, the company offered 33 vehicle brands in 209 stores in 22 states of the United States. The main brands offered by Lithia Motors include Chrysler, General Motors, Toyota, Subaru, Honda, Acura, Ford, BMW, MINI, Nissan and Hyundai.
Lithia Motors offers a tailor-made service supplemented by its national network. Plus, it has the largest inventory online with competitive prices on vehicles and service. In July 2020, Lithia introduced Driveway, an e-commerce platform, which enables the company to deliver exclusive and differentiated digital experiences.
In addition to a wide range of new and used vehicles, the company offers financing and insurance products, as well as auto repair and maintenance. It focuses on diversifying products, services, brands and geographic locations in order to reduce reliance on a manufacturer while reducing exposure to changing consumer preferences.
Lithia Motors has three sectors to present as follows:
The domestic segment includes retail auto franchises that sell new vehicles manufactured by Chrysler, General Motors and Ford.
The Import segment includes retail automobile franchises that sell vehicles manufactured primarily by Honda, Toyota, Subaru, Nissan and Volkswagen.
The Luxury segment includes retail automobile franchises that sell new vehicles manufactured primarily by BMW, Mercedes-Benz and Lexus.
In addition to new vehicles, all of the above segments deal with used vehicles, auto parts and services, as well as auto finance and insurance products for brands.
Lithia’s business mix includes new vehicles (representing around 51.6% of the company’s revenue in 2020), used vehicles (32.8%), parts and services (10.3%) , fleet and others (0.8%) and finance and insurance (4.5%). As at December 31, 2020, Lithia had $ 1.4 billion in liquidity, of which $ 160.2 million was in cash and $ 1.2 billion available on our credit facilities.
In 2020, the company acquired thirty stores and divested five stores. It has invested $ 1.2 billion to acquire the stores and expects these acquisitions to bring it more than $ 3.5 billion in annual revenue.
Building a successful investment portfolio takes a combination of research, patience and a little bit of risk. For Lithia Motors, if you bought stocks ten years ago, you are probably feeling very good about your investment today.
An investment of $ 1,000 made in September 2011 would be worth $ 23,134.78, or a gain of 2,213.48%, as at September 28, 2021, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
The S&P 500 rose 278.01% and the price of gold rose 1.87% over the same period in comparison.
Looking ahead, analysts expect more upside for LAD.
Lithia’s diverse product line and multiple revenue streams reduce its risk profile. Lithia’s five-year plan to generate $ 50 billion in revenue and $ 50 in earnings per share is a cause for optimism. Improved digital solutions, including the Driveway e-commerce program, help Lithia to further increase its profitability and market presence. The acquisition of concessions by Lithia contributes to increasing its market share and positions it for growth. Through the acquisitions made, the auto retailer has achieved total annualized revenue of approximately $ 5.9 billion to date in 2021. Lithia’s investor-friendly measures boost shareholder confidence. The company has increased its dividend in each of the past five years with an annualized dividend growth rate of 5.6%. Therefore, the action now justifies a bullish position.
5 actions in the process of doubling
Each was selected by a Zacks expert as the # 1 favorite stock to earn + 100% or more in 2021. Previous recommendations climbed + 143.0%, + 175.9%, + 498.3% and + 673.0%.
Most of the stock in this report is flying under Wall Street’s radar, which provides a great opportunity to get into the ground floor.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.