Investing gurus were all atwitter earlier this month, when it was revealed that Warren Buffett had purchased a 6.4% stake in Motley Fool Inside Value recommendation CarMax
And interesting, because it sets up the subject of today's mini-column.
According to a report just out on Reuters, the man often heralded as "the next Warren Buffett" just upped his stake in one of CarMax's biggest competitors. That's right: In addition to owning sizeable stakes in Citigroup
Who's smarter?
Which raises the question: Which of these two titans of the investing world is placing the smarter bet? (And another: If these two certifiable geniuses are both focused on the car dealers, how off his rocker must Kirk Kerkorian have been to be wasting time on car makers GM
Taking a quick side-by-side view of Buffett's and Lampert's targets, here's what I see:
|
P/E |
Growth Rate |
PEG |
Recent Growth* |
|
|---|---|---|---|---|
|
CarMax |
23 |
18% |
1.2 |
10% |
|
AutoNation |
11 |
10% |
1.1 |
(5%) |
I have to admit that, biased as I am in favor of CarMax, I set out on this column with the expectation that I'd find Buffett the hands-down winner. But looking at the numbers, it's actually a much closer call. From a PEG perspective, AutoNation actually looks to be a better buy than CarMax -- even if the pair's recent performance suggests that CarMax is winning the market-share race against its larger rival. AutoNation also has the edge on price when evaluated on price-to-book value, price-to-sales, and that favorite metric of buyout artists, enterprise value-to-EBITDA.
Reluctant as I am to admit it, Eddie Lampert might -- just might -- be making the smarter car play here. But hey, if the runner-up prize in this race is finding yourself riding shotgun with Warren Buffett, I think I can live with my "mistake" of having bought CarMax instead of AutoNation.
Check out the recent performance of these companies:
