3 Used Car Stocks Benefiting from High Auto Prices

Buying a new car has become increasingly expensive, with prices remaining elevated due to inflation, supply chain disruptions, and rising production costs. In contrast, the average price gap between new and used cars (roughly $20,000) has made pre-owned vehicles a more attractive option for budget-conscious buyers.

This trend has fueled strong demand in the used car market, benefiting companies like Carvana Co. (CVNA), CarGurus, Inc. (CARG), and Cars.com Inc. (CARS), which are capitalizing on shifting consumer preferences.

The latest Consumer Price Index (CPI) report shows that used vehicle prices jumped 2.2% in January, marking the largest monthly increase since May 2023. Meanwhile, new car prices remained flat, reinforcing the affordability gap that continues to push more buyers toward pre-owned vehicles.

The Manheim Used Vehicle Value Index, which tracks wholesale auction prices, also climbed 0.8% year-over-year, reflecting continued strength in demand. Moreover, supply constraints, rising auto insurance costs, and expensive repair bills due to advanced technology in newer models have made used cars a more practical and cost-effective choice for many consumers.

Beyond affordability, the use of digital tech and AI has revolutionized the way people buy used cars. Today, online platforms powered by AI and data analytics let buyers browse inventory, compare prices, and even do virtual inspections from their couches. According to Technavio, the U.S. used car market is projected to grow by $40.2 billion between 2025 and 2029 at a 4.3% CAGR, driven by convenience, affordability, and the increasing popularity of certified pre-owned and luxury vehicles.

With that in mind, let’s examine the fundamental aspects of the above-mentioned stocks in detail:

Carvana Co. (CVNA)

CVNA operates an e-commerce platform for buying and selling used cars in the United States. The company’s platform enables customers to research and identify a vehicle, inspect it using its 360-degree vehicle imaging technology, obtain financing and warranty coverage, purchase the vehicle, and schedule delivery or pick-up from their electronic devices.

On February 11, 2025, CVNA announced its plans to integrate its Inspection and Reconditioning Center (IRC) with the existing ADESA Indianapolis wholesale auction site. This “Megasite” will enhance the company’s production capacity while maintaining both digital and in-lane auction operations. The initiative aims to strengthen services for retail and wholesale customers in Indianapolis while also creating new job opportunities in the area.

For the third quarter of 2024, which ended on September 30, CVNA’s net sales and operating revenues increased 31.8% year-over-year to $3.66 billion. Its gross profit rose 67.4% from the prior-year period to $807 million. Its operating income for the quarter amounted to $337 million, indicating a considerable improvement from the year-ago value of $48 million. Also, the company’s adjusted EBITDA stood at $429 million, up 189.9% year-over-year.

Street expects CVNA’s revenue for the fiscal first quarter (ending March 2025) to increase 20.8% year-over-year to $3.70 billion. Moreover, its EPS estimate of $0.56 for the same period indicates a 141.7% improvement from the prior year. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.

Shares of CVNA have surged 128.4% over the past nine months and 31.5% year-to-date to close the last trading session at $267.93.

CVNA’s POWR Ratings reflect its fundamentals. The stock has an A grade for Growth. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

Among 48 stocks in the A-rated Internet industry, CVNA is ranked #40. To access CVNA’s Value, Momentum, Stability, Sentiment, and Quality ratings, click here.

CarGurus, Inc. (CARG)

CARG operates an online automotive marketplace connecting buyers and sellers of new and used cars through two segments: U.S. Marketplace and Digital Wholesale. Its platform enables consumers to search for new and used car listings from its dealers, as well as sell their cars to dealers and other consumers.

Last year, in October, the company opened its new global headquarters in Boston’s Back Bay, consolidating nearly 1,000 employees into a 225,000 sq. ft. workspace at 1001 Boylston Street. The state-of-the-art office, part of the Lyrik mixed-use development, is designed for modern, flexible work environments.

This move highlights CARG’s commitment to growth in the region, reinforcing its award-winning workplace culture and ongoing community impact initiatives.

During the third quarter that ended on September 30, 2024, CARG’s total revenue increased 5.4% year-over-year to $231.36 million, while its gross profit grew by 11.1% from the year-ago value to $182.55 million. The company’s non-GAAP net income came in at $47.06 million and $0.45 per share, reflecting an increase of 22.8% and 32.4% over the prior year’s quarter.

The consensus revenue estimate of $231.72 million for the fiscal fourth quarter (ended December 2024) represents a 3.9% increase year-over-year. The consensus EPS estimate of $0.52 for the same quarter indicates a 47.9% improvement year-over-year. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.

Over the past year, the stock has gained 67.2%, closing the last trading session at $39.29.

CARG’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to Buy in our proprietary rating system. It also has an A grade for Growth and a B for Quality. Within the same A-rated industry, it is ranked #15. 

Click here to see the other ratings of CARG for Value, Momentum, Stability, and Sentiment.

Cars.com Inc. (CARS)

CARS is an audience-driven technology company that offers solutions for the U.S. automotive industry through its Cars Commerce platform. It connects car shoppers with dealers and manufacturers, providing financing tools with instant loan screening and approvals. The company also equips buyers with digital resources to make informed car-buying decisions while helping sellers reach ready-to-buy customers efficiently.

On January 24, 2025, CARS acquired DealerClub, a reputation-based automotive digital wholesale auction, for $25 million, with potential performance-based payouts of up to $88 million. This strategic move expands the company into the $10 billion wholesale used car market, adding a transactional revenue stream to its subscription-based business.

Moreover, the acquisition enhances its Trade & Appraisal strategy, accelerates AccuTrade adoption, and creates cross-selling opportunities.

CARS’ revenues for the third quarter (ended September 30, 2024) increased 3.1% year-over-year to $179.65 million. The company’s adjusted EBITDA came in at $51.13million, up 3.3% year-over-year, while its adjusted net income for the quarter amounted to $27.70 million and $0.41 per share, indicating an increase of 1.3% and 2.5% over the prior-year period. Also, its free cash flow increased 55.5% year-over-year, amounting to $47.25 million.

Analysts expect CARS’ revenue for the fourth quarter (ended December 2024) to increase 2.5% year-over-year to $184.16 million. The company’s EPS for the same quarter is expected to grow 41.7% from the year-ago value to $0.56.

The stock has gained 5.6% over the past month to close the last trading session at $17.45.

It’s no surprise that CARS has an overall rating of B, equating to a Buy in our POWR Ratings system. It also has a B grade for Value and is ranked #4 out of 22 stocks in the Auto Dealers & Rentals industry.

Beyond what is stated above, we’ve also rated CARS for Growth, Momentum, Stability, Sentiment, and Quality. Get all CARS ratings here.

What To Do Next?

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CVNA shares . Year-to-date, CVNA has gained 33.95%, versus a 4.04% rise in the benchmark S&P 500 index during the same period.

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.

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