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Asbury Automotive Group, Inc. (ABG)

Hedge funds increased their ownership of this auto retailer by 29% in the third quarter, and Zack’s rates it a “Buy”.

Asbury Automotive Group, Inc. (ABG)
From AlphaProfit Sector Investors’ Newsletter

Although the December job report has calmed investors on the U. S. economy losing momentum or wage pressures building up, uncertainty persists on other fronts. Key worries include the state of the Chinese economy, political tensions in the Middle East, and developments in the Korean peninsula. Quality of 2016 corporate earnings forecasts adds to the above list of uncertainties.

Economic conditions in the U. S. are generally favorable. We believe U. S. stocks can fare better when global uncertainties subside. Investors who brave the current turbulence and increase allocation to stocks can reap rewards down the road.

We recommend current & new subscribers to invest 30-55% of total investable assets in stocks, the specific percentage being dependent on investment objective and risk tolerance. Subscribers can invest the remainder in money market and income investments.

We rate the AlphaProfit Sector Portfolio Indicator ‘Buy on Dips’. We recommend increasing allocation to stocks by 5% to the 35% to 60% range if the S&P 500 dips below 1835.

Shares of Asbury Automotive Group Inc. (AGB) are down considerably from their October 2015 high. Market jitters in 2016 have exacerbated the drop in the auto retailer’s shares after new vehicle gross margin eroded in the third quarter.

The sell-off in the Asbury shares is a buying opportunity. Asbury’s diversified sales mix of new and used vehicles, financial products, and services should help in growing profits.

Its shares appeal to risk-tolerant investors seeking growth-at-a-reasonable-price. They trade at 7.4X-forward EPS versus prospects for 15% EPS growth in the next 12 months (Next earnings: Feb. 4)

Sam Subramanian, PhD, AlphaProfit Sector Investors’ Newsletter,, 281-565-6963, January 2016