America's Car-Mart (CRMT)

CRMT is actually more highly rated by a majority of analysts covering the used vehicle sector than any competitor - including Car Max. Located in Bentonville, Arkansas, Americas Car-Mart has control over almost all the pieces of their business - kind of like the "other" Bentonville, Arkansas company. CRMT recently opened two new lots, in Lexington, Kentucky and Stillwater, Oklahoma - growing slow and steady. President Hank Henderson, on the eve of announcing CRMT earnings on September 4th, stated that America's Car-Mart has the best selection of quality used vehicles in their 25-year history. Business is brisk.

If you think that the average southern American will shun high-priced,smaller hybrids for those low-priced "mature" SUVs, Oldsmobiles, Pontiacs, Chevys and Fords that can be financed or bartered through a small town car lot with locals running the show (making money on all the angles), CRMT may be worth your speculation. The bet is that the red states will purchase within their financial means (a lesson yet to be learned on the coasts) and continue to grow America's Car-Mart business.This stock may hit $25 soon if earnings beat the street estimate next week.

Smicklas makes some strong points ("Smart Management Makes the Business Model Work"). The stock has fallen dramatically, though, as the market has plunged. I recently wrote about the company on my blog (http://ab.typepad.com/ab_analytical_services/2008/11/americas-car-mart-great-vehicle-for-tough-times.html) and the stock has fallen even further.

I interviewed the Chairman, Skip Falgout, after posting my views and was even more interested in the story. The company is seeing customers come into its dealerships that previously hadn't stepped foot inside. He stated that while they didn't exactly come in admitting it, clearly the access to financing is a big issue. The company, which stumbled a few years ago when it expanded too rapidly, is all about nuts and bolts: Execution. The get cars, they sell them, they finance them and they collect on them. It sounds to me like they getting cars part is easier - they just have to go next door to the dealer who can't sell cars because their lenders will no longer finance them.

The stock trades at/below book value, a very low PE and well below its potential growth. CRMT is one of just a handful of companies outside of healthcare and consumer staples that I expect can actually grow in 2009.