Have you ever wondered why car salesmen always sport an ear-to-ear grin?
Well, aside from the hefty commissions, they're selling more cars with every passing day…
….but the car salesman isn't the only one getting rich thanks to Australians' willingness to buy new cars with cash or – more commonly – debt.
Banks, car dealerships and advertisers are all relishing the idea of rising new car sales.
3 pedal-to-the-metal GROWTH stocks
Although we should remind ourselves that new car sales won't go up every year (e.g. between 2007 and 2009), we can take part in the new car frenzy with the three following ASX-listed car companies:
| Price-Earnings Ratio | Dividend Yield | 5 Year TSR* | |
| Automotive Group Holdings Ltd (ASX: AHG) | 13x | 5.4% fully franked | 18.60% |
| AP Eagers Ltd (ASX: APE) | 23x | 2.7% fully franked | 37.70% |
| Carsales.Com Ltd (ASX:CAR) | 22x | 3.3% fully franked | 20.10% |
Source: Morningstar Inc.; TSR* = Share Price Capital Gains plus dividends paid, compounded yearly.
Automotive Group Holdings is Australia's leading automotive and logistics group. Established in 1952, Automotive Group Holdings has a growing refrigerated business and 101 car dealerships nationally.
A.P. Eagers is Australia's oldest listed automotive retail group. It owns 19.9% of Automotive Group Holdings and represents 27 car brands and 11 leading truck and bus brands. Moreover, it's well and truly proven to be the premier investment for those tapping into the rise of new car sales.
Carsales.Com is a name synonymous with retail car sales, both new and used. Surprisingly, for all its dominance in the local market, Carsales' shares change hands at a reasonable price-earnings ratio of 22x. For long-term growth, Carsales also owns strategic investments in SK ENCARSALES.COM Ltd (South Korea), Webmotors S.A. (Brazil) and iCar Asia Ltd (ASX: ICQ).
Buy, Hold or Sell?
Bearing in mind the vicissitudes of the stockmarket and car sales, if you're prepared to hold shares through the good times and the bad; you could consider buying shares in each of these three quality companies today. However, prudent value investors may be inclined to hold off for a more compelling valuation before hitting the buy button on their shares.
