Penske Stock Revving Up For Another Road Trip Higher?

Cars for sale have been in short supply, giving auto sellers like Penske Automotive Group (PAG) pricing power. On Tuesday, Penske stock hit an important technical milestone, with its Relative Strength (RS) Rating entering into the 90-plus percentile due to an upgrade to 91, up from 88 the day before.


The new 91 RS Rating means that Penske stock has outperformed 91% of all stocks over the past year. Market research shows that the stocks that go on to make the biggest gains typically have an RS Rating north of 80 at the beginning of a new price run.

Penske Stock Roared 400% Higher From Early 2020

A semiconductor shortage has hit new car makers hard, in most cases forcing them to cut back on production. With new car prices rising and in short supply, consumers turned to the used car market. That, in turn, has led to fewer used cars for sale and higher prices.

Penske Automotive Group, whose headquarters is in the greater Detroit area, has benefited from the slowly recovering economy and higher prices for autos. Its stock has soared more than fivefold from a Covid crash low 19.99 in late March 2020 to above 100.

Its stock skidded nearly 12% on Nov. 17, a day after the company announced it is buying McCoy Freightliner, an Oregon-based auto and truck dealer. However, Penske stock has come off the 95.86 low on Nov. 19 and traded at 101.04 Tuesday afternoon, down fractionally in sync with market consolidation.

Among other key ratings. Penske stock holds a 91 Composite Rating, of a best-possible 99. The IBD Composite Rating helps investors easily measure the quality of a stock’s fundamental and technical metrics. The best growth stocks have a Composite Rating of 90 or better.

Additionally, its 94 EPS Rating puts it in the top 6% of all companies on recent and long-term profit growth. Penske stock’s B on an A+ to E scale, shows that institutional investors are buying its shares. Its relative strength line, which compares a stock’s performance vs. the S&P 500, hit an all-time high on Oct. 25, in synch with an all-time intraday high 114.34 stock price, then backed off a bit. Lately its RS line has been trending higher again, a bullish sign.

Profit Jumped 58% Last Quarter

The company posted 58% EPS growth in its most recent report, to $4.46 per share. Sales grew 9% to $6.5 billion. Penske has reported double- or triple-digit earnings growth every quarter for at least the past year.

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Penske stock is now considered extended and out of buy range after clearing a 92.06 buy point in a second-stage cup with handle. See if the stock forms a new pattern or follow-on buying opportunity like a three-weeks tight or pullback to the 50-day or 10-week moving average.

Penske stock holds the No. 3 rank among its peers in the Retail/Wholesale-Auto Parts industry group. Autonation (AN) and Group I Automotive (GPI) are among the top 5 highly rated stocks within the group.

When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength. IBD’s proprietary RS Rating tracks market leadership by using a 1 (worst) to 99 (best) score that indicates how a stock’s price action over the trailing 52 weeks matches up against the rest of the market.


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