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Strategies & Market Trends : CANSLIM - COAST TO COAST
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To: Feraldo who wrote (6156)12/20/2001 12:08:09 AM
From: Carl Worth   of 6445
 
KMX sells used cars and has a profit margin of 2.4%, see auto nation and ugly duckling for examples of what a small downturn/hiccup in that business can do although by valuation AN is more attractive than KMX right now....KMX has done well so far but i'd be real hesitant to pay 25x earnings for a company like that, it was a great find at 3, now it's fully discovered

ACF on the other hand has margins of 28%, grows at 25% a year plus and trades at a p/e of 8...the shorts have piled into it based on the weak economy but they are currently getting roasted...6M shares were shorted from 10/8 to 11/8, at this point any of those shares still held short are at a loss and that will just add to the rise as they eventually have to cover, not to mention the other 8M that were already short, with the volume that this thing trades a lot of them may have covered after 11/8, either way they seem to have lost their grip on the stock

i mostly trade ACF as it bounces back and forth a lot and has lots of buying opportunities that lead to quick gains but i also think it will be much higher in the long run...it will never trade at a market multiple due to the credit risk concerns but even a 12 p/e on next year's earnings is a stock in the mid 50's

carl
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