Summary
We recently discussed AutoNation over at BAD BEAT Investing and wanted to share with you the trade idea we discussed.
We see recent share price movements as an overreaction to Morgan Stanley's call.
There is technical support and the company's share repurchase program is increasing shareholder value.
Look for a bounce above $50.
This idea was discussed in more depth with members of my private investing community, BAD BEAT Investing.
We recently discussed AutoNation (AN) over at BAD BEAT Investing and wanted to share with you the trade idea we discussed as we believe there remains upside to this trade. Essentially, AutoNation's stock after being hit for several months took a big blow on the chin last week following some commentary from Morgan Stanley and a downgrade. We believe the stock will rebound.
Morgan Stanley's commentary, which was somewhat bearish for AutoNation, stemmed from the fact that it sees the auto retailer sector having more consolidation on the road ahead as tech investments in cars and car sales ramp up. The firm sees increasing capital needs as the auto industry progresses toward a "nearly 100% B2B model from B2C". As such, it made several upgrades and downgrades in the sector. It cut AutoNation to Underweight from Overweight.
