Low interest rates and rising gas prices are pushing consumers
to trade in their old vehicles for newer ones. This trend bodes
well forPenske Automotive Group (
) -- the nation's second-largest auto dealer.
Penske has posted double-digit earnings growth in each of the
past 10 quarters. Sales climbed by double digits for the past
Earnings and sales fell in 2008 and 2009, but Penske has
delivered growth since. Last month, Penske reported full-year
2012 profit that jumped 27% to $2.28 a share. Sales grew 18% to
more than $13 billion. That was the biggest top-line gain in 10
Analysts see earnings rising 12% to $2.56 a share this year.
The estimate was recently revised higher.
Penske has a three-year Earnings Stability Factor of 4,
indicating rock steady growth.
Besides stable growth, Penske has been revving up its
shareholder dividend since 2011. It halted its dividend program
in 2009 to save cash during hard economic times.
Penske has since raised its dividend seven times. In late
January, the company hiked its cash distribution by nearly 8% to
14 cents a share. Its dividend doubled in less than two
On an annual basis Penske pays 56 cents a share, giving it a
yield of about 1.7%. It has the second highest yield in the
Retail/Wholesales-Automobile group. RivalKar Auction Services (
) offers the highest yield at 3.8%.
Penske is trading in a cup base with a 34.44 buy point. The
stock is riding a three-week win streak. Technically, the cup
formation is the second part of a base-on-base pattern.
On the downside, Penske's latest base is a third-stage
structure. Generally it's best to focus on first- or second-stage