Based on the aggregated intelligence of 110,000 investors participating in Motley Fool CAPS, the Fool's free investing community, used vehicle retailer CarMax (NYSE:KMX) has earned a respected four-star ranking. While five-star stocks have been the best performers, our data has shown that four-star stocks still outshine the market by a significant margin; conversely, low-rated stocks have woefully lagged the market average.

With that in mind, let's take a closer look at CarMax's business, and see what CAPS investors are saying about the stock right now.

CarMax facts

Headquarters (Founded)

Richmond, Virginia (1993)

Market Cap

$3.28 billion


Automotive retail

TTM Revenue

$8.32 billion


CEO Thomas Folliard (since 2006); CFO Keith Browning (since 1996)

Return on Equity (avg. last three years)


CAPS members bullish on KMX also bullish on

Johnson & Johnson (NYSE:JNJ)
Starbucks (NASDAQ:SBUX)

CAPS members bearish on KMX also bearish on

Wachovia (NYSE:WB)
Circuit City Stores (NYSE:CC)
Merrill Lynch   (NYSE:MER)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 204 of the 217 All-Star members who have rated CarMax -- some 94% -- believe the stock will outperform the S&P 500 going forward. These All-Star bulls include LiLNipsFatal and my Foolish colleague Tim Hanson (a.k.a. TMFMmbop), both of whom are ranked in the top 2% of our community.

In March, LiLNipsFatal noted that, "the used car market is a highly fragmented industry. As Carmax continues to build supercenters across America, their scale should enable them to capture market share from smaller competitors."

An earlier pitch from Tim in November 2006 shares that bullish sentiment, relating CarMax to a few other Foolishly familiar names:

I have a deep respect for business models like that at CarMax, or Blue Nile, and even The Motley Fool. What these companies have done is take an industry that was somewhat shady, made its customers feel awkward, and never guaranteed the same price or the same results, and made it more transparent, more user friendly, more educational, more fun, and more rewarding. These types of businesses represent such a vast improvement over the status quo, that I think that they can do nothing but succeed.

What do you think about CarMax, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 110,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

CarMax and Starbucks are Motley Fool Inside Value recommendations. Blue Nile is a Rule Breakers pick. Apple and Starbucks are Stock Advisor selections. Johnson & Johnson is an Income Investor pick. The Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days.

Foolish contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool's disclosure policy always gets a perfect score.