Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell even higher, with the expectation that established trends will continue [1] Group 1: Company Overview - Carvana (CVNA) currently holds a Momentum Style Score of B, indicating a positive momentum characteristic [2] - The company has a Zacks Rank of 2 (Buy), suggesting strong potential for outperformance in the market [3] Group 2: Price Performance - Over the past week, CVNA shares increased by 9.11%, outperforming the Zacks Internet - Commerce industry, which rose by 1.42% [5] - In a longer timeframe, CVNA shares have risen by 74.53% over the past three months and 192.12% over the last year, significantly outperforming the S&P 500's gains of 23.56% and 13.28%, respectively [6] Group 3: Trading Volume - The average 20-day trading volume for CVNA is 3,378,263 shares, which serves as a bullish indicator when combined with rising stock prices [7] Group 4: Earnings Outlook - In the last two months, four earnings estimates for CVNA have been revised upwards, increasing the consensus estimate from $4.48 to $4.99 [9] - For the next fiscal year, five estimates have moved higher while one has been revised downwards, indicating a generally positive earnings outlook [9] Group 5: Conclusion - Given the positive momentum indicators and earnings outlook, CVNA is positioned as a promising stock for near-term investment [11]

Core Viewpoint - Carvana's stock has shown significant growth, outperforming both the retail-wholesale sector and the internet-commerce industry, with a year-to-date increase of 75.7% compared to 5.2% and 7.4% respectively [1] Financial Performance - Carvana has consistently exceeded earnings expectations, reporting an EPS of $1.51 against a consensus estimate of $0.75 in its last earnings report [2] - For the current fiscal year, Carvana is projected to achieve earnings of $4.99 per share on revenues of $18.08 billion, reflecting a 213.84% increase in EPS and a 32.23% increase in revenues [3] - The next fiscal year forecasts earnings of $6.14 per share on revenues of $22.66 billion, indicating year-over-year growth of 22.96% in EPS and 25.33% in revenues [3] Valuation Metrics - Carvana's stock trades at a high valuation, with a current fiscal year EPS estimate of 71.6 times, compared to a peer industry average of 25 times [7] - The trailing cash flow basis shows a valuation of 167.2 times, significantly higher than the peer group's average of 15.9 times [7] - The stock has a PEG ratio of 1.39, which does not place it among the top value stocks [7] Zacks Rank and Style Scores - Carvana holds a Zacks Rank of 2 (Buy), supported by a positive earnings estimate revision trend [8] - The company has a Value Score of D, while its Growth and Momentum Scores are A and B respectively, resulting in a VGM Score of B [6][8] - Carvana meets the criteria for investment selection based on Zacks Rank and Style Scores, suggesting potential for further stock price appreciation [8]

Core Insights - Carvana Inc. (CVNA) is trading at a forward sales multiple of 3.65, significantly higher than its peers and its own five-year average [1][7] - Despite appearing expensive, Carvana's strong sales momentum and operational improvements may justify the premium valuation [3][14] Sales Performance - Carvana's retail sales increased by 33.1% year-over-year to 416,348 units last year, with Q1'25 sales rising 45.7% due to strong demand [4][7] - The company anticipates further sequential growth in retail unit sales for Q2 and expects substantial growth for the full year 2025 [4] Operational Efficiency - Carvana is enhancing operational efficiency through various technology and process initiatives, including cost reductions in reconditioning and transport [5] - The company reported record adjusted EBITDA of approximately $488 million in Q1'25, more than doubling from the previous year, with an adjusted EBITDA margin of 11.5%, the highest among public car dealers [6][7] Market Performance - Carvana's stock has surged over 70% year-to-date, contrasting with a 13.8% decline in the auto sector, while competitors like CarMax and Lithia Motors have seen declines [10] - The Zacks Consensus Estimate projects a 214% increase in annual earnings to $4.99 per share for 2025, with a further 23% increase expected in FY26 [12] Investor Sentiment - Investors are responding positively to Carvana's results, indicating that the market is betting on continued growth rather than mere speculation [14] - As long as the growth narrative remains intact, Carvana's elevated valuation multiple appears justified [14]

Core Insights - Moretus Research specializes in high-quality equity research aimed at serious investors, focusing on clarity, conviction, and alpha generation [1] - The firm employs a strategy of "positive paranoia" to analyze investments, emphasizing sentiment analysis and competitive positioning to predict future performance [1] - A notable investment recommendation was made at the beginning of 2023, where Carvana was purchased at $5 per share, highlighting an 88% short interest that was deemed excessive, leading to a significant turnaround [1] - The investment in Carvana yielded over 60 times returns over three years, showcasing the firm's ability to identify substantial opportunities [1] - Moretus Research aims to uncover data advantages through alternative data sources, covering both current holdings and potential future investments [1]

Group 1: Company Performance - GMS has gained approximately 28.2% year-to-date, significantly outperforming the average gain of 4.8% in the Retail-Wholesale group [4] - GMS currently holds a Zacks Rank of 2 (Buy), indicating strong analyst sentiment and a positive earnings outlook [3] - The Zacks Consensus Estimate for GMS' full-year earnings has increased by 3.5% over the past 90 days, reflecting improved analyst sentiment [3] Group 2: Industry Context - GMS is part of the Building Products - Retail industry, which consists of 4 individual stocks and currently ranks 11 in the Zacks Industry Rank [5] - The average performance of stocks in the Building Products - Retail industry has declined by 5.4% this year, highlighting GMS's superior performance [5] - Another outperforming stock in the Retail-Wholesale sector is Carvana (CVNA), which has returned 66.3% year-to-date [4][6]

Market Overview - U.S. stock markets experienced a successful June, with the Dow, S&P 500, and Nasdaq Composite increasing by 4%, 5.7%, and 5.7% respectively, closing at record-high levels for the first half of 2025 [1] - Despite this success, the first half of 2025 marked the weakest performance for the indexes since 2022, with potential catalysts for the second half including a U.S.-China trade deal, anticipated interest rate cuts by the Fed, and reduced recession fears [2] Imaginary Portfolio - An imaginary diversified portfolio was created, consisting of five stocks that each gained over 50% in the first half of 2025, with further upside potential indicated by favorable Zacks Ranks [3][4] Company Highlights Jabil Inc. (JBL) - Jabil is benefiting from strong momentum in capital equipment, AI-powered data center infrastructure, and digital commerce, with a focus on product diversification [7] - Expected revenue and earnings growth rates for Jabil are 5.9% and 18.5% respectively for the next year, with a 9% improvement in the Zacks Consensus Estimate for next-year earnings over the last 30 days [9] Howmet Aerospace Inc. (HWM) - Howmet Aerospace is experiencing growth in the commercial aerospace market, supported by robust build rates and recovery in wide-body aircraft, along with strength in its defense aerospace business [10] - Expected revenue and earnings growth rates for Howmet are 8.5% and 29% respectively for the current year, with a 0.3% improvement in the Zacks Consensus Estimate for current-year earnings over the last seven days [11] CVS Health Corp. (CVS) - CVS Health is investing in technology to reduce costs and enhance customer experience, with improved Medicare Advantage star ratings aiding its position [12] - Expected revenue and earnings growth rates for CVS are 3.5% and 12.6% respectively for the current year, with a 2.3% improvement in the Zacks Consensus Estimate for current-year earnings over the last 60 days [14] Carvana Co. (CVNA) - Carvana's acquisition of ADESA's U.S. operations has strengthened its logistics and auction capabilities, with expectations for year-over-year growth in retail unit sales [15][16] - Expected revenue and earnings growth rates for Carvana are 32.1% and over 100% respectively for the current year, with a 7.8% improvement in the Zacks Consensus Estimate for current-year earnings over the last 30 days [17] NRG Energy Inc. (NRG) - NRG Energy operates in the energy and home services sector, producing electricity from various sources and expanding operations through both organic and inorganic initiatives [18][19] - Expected revenue and earnings growth rates for NRG are 2.6% and 17% respectively for the current year, with a 2.8% improvement in the Zacks Consensus Estimate for current-year earnings over the last 60 days [20]

Core Insights - Carvana Co. (CVNA) utilizes a technology-driven assembly-line process to recondition used vehicles, allowing efficient transformation into retail-ready inventory for direct delivery to customers [1] Company Goals and Performance - Carvana has set a long-term target of achieving 3 million vehicle sales annually, requiring an increase in production to approximately 90 units per week over the next 10 years, or 180 units per week for a 5-year goal, which the company considers attainable [2][10] - The company has increased its production capacity by an average of 80 units per week over the past year due to rising inventory levels and growing consumer demand [3] Market Position - The target of 3 million annual sales represents about 7.5% of the 40-million-unit U.S. used vehicle market, which is considered a modest share compared to leading players in comparable retail sectors [4] - Competitors like Group 1 Automotive and Lithia Motors have been expanding their geographical footprints to boost sales, although they have not set ambitious annual sales goals [5] Competitor Activities - Group 1 Automotive has acquired three U.S. dealerships, adding approximately $430 million in annualized revenues [6] - Lithia Motors has strengthened its presence in the southeastern U.S. through acquisitions expected to contribute around $400 million in annualized revenues [7] Financial Performance - Carvana's stock has outperformed the Zacks Internet – Commerce industry, with shares gaining 50.7% year to date compared to the industry's growth of 3.9% [8] - From a valuation perspective, Carvana appears overvalued with a forward price/sales ratio of 3.23, higher than the industry's 2.01 [12] Earnings Estimates - The Zacks Consensus Estimate for 2025 and 2026 EPS has increased by 36 cents and 5 cents, respectively, in the past 30 days [13]

Financial Performance - In Q1 2025, Carvana achieved a new company retail unit sales record of 133,898[11] - Carvana reported a net income of $373 million with a net income margin of 8.8% in Q1 2025[11] - The company's GAAP operating income was $394 million, resulting in a GAAP operating margin of 9.3% in Q1 2025[11] - Adjusted EBITDA for Q1 2025 reached $488 million, with an Adjusted EBITDA margin of 11.5%[11] - Carvana has consistently driven Adjusted EBITDA margin within its 2018 long-term financial model range of 8% to 13.5% for four consecutive quarters[24, 25] Growth and Strategy - Carvana's retail units sold grew 46% year-over-year, with an Adjusted EBITDA margin 2x the industry average among public automotive retailers[12] - The company aims to sell 3 million retail units per year at an Adjusted EBITDA margin of 13.5% within 5 to 10 years[26] - Carvana is expanding its production locations, expecting to have 34-36 locations by year-end at a capital expenditure of $2 to $3 million per site[40] Market Position - E-commerce adoption in the U S used vehicle market is still in an early stage, with Carvana representing approximately 1% of the market[18] - Carvana is focused on improving customer offering, increasing awareness and trust, and expanding selection to drive growth[14, 17, 20]

Market Overview - The U S used car market is massive, with $12 trillion in sales in 2022[11] - The used car market is highly fragmented, with the largest dealer brand holding only 23% of the U S market share[11] - There were 36 million used automobile transactions in 2023[11] - The used car market is expected to grow at a CAGR of 43% from 2025E to 2029E[11] - Over 43,000 used car dealerships exist[11] Customer Experience - Carvana aims to provide the best customer experience, selection, and value[15] - Carvana offers over 53,000 cars on its website[15] - Carvana's platform allows customers to complete a purchase in as little as 10 minutes after vehicle selection[15] - Carvana's customers have an average rating of 47/50, and 84% would recommend Carvana to a friend[31] Financial Performance - In Q1 2025, Carvana's net income margin benefited from a $158 million gain associated with positive changes in the fair value of warrants to acquire Root common stock[63] - Carvana's adjusted EBITDA margin in Q1 2025 was 115%[74] - Wholesale vehicle gross profit per unit in Q1 2025 was $1,009[22]

Core Viewpoint - Carvana is experiencing a potential turnaround due to recent tariff changes making new cars more expensive, leading to increased demand for used cars, which the company is well-positioned to capitalize on [2][5][15] Group 1: Tariff Impact - A 25% tariff on imported vehicles has caused average new car prices to rise by 2.5% in April, with expectations of an additional 10% to 15% increase by summer [4][5] - The tariff situation has led to a rush of buyers locking in pre-tariff deals, tightening supply and pushing used car prices up, benefiting Carvana [5][4] Group 2: AI and Profitability - Carvana's AI-driven pricing system is making thousands of real-time pricing adjustments, contributing to a record quarterly net income of $373 million in Q1 2025, with total revenue increasing by 38% year over year and units sold rising by 46% [7][8] - The gross profit per unit reached an all-time high of over $6,900, indicating improved profitability per sale [8] Group 3: Competitive Advantage - Carvana's profit margin of 8.8% significantly exceeds CarMax's 1.5% margin, showcasing superior operational efficiency [10] - With Vroom exiting the online auto retail space, Carvana is now the only national online-only used auto retailer, allowing it to maintain lower costs compared to traditional dealerships [11] - The company has 40 car vending towers nationwide and a robust logistics network, enabling coast-to-coast scale without high overhead costs [12] Group 4: Future Growth Opportunities - Carvana's proprietary pricing software could potentially be licensed to other dealers, creating a new high-margin revenue stream [11] Group 5: Financial Considerations - Carvana's long-term liabilities stand at $5.7 billion, with cash on hand at $1.9 billion, indicating a significant debt load despite a 4.35% year-over-year reduction [13] - The company faces risks related to policy uncertainty, particularly if tariffs are reversed or retaliatory tariffs are imposed [14] Group 6: Investment Outlook - Year-to-date, Carvana shares have increased over 70% and are still trading below their all-time high, suggesting potential for further investment [16]