An ASX share that gains 29% in one month is impressive enough, but what if that was just the start of its ascent?
That's the situation we have with car dealership network Eagers Automotive Ltd (ASX: APE), according to the analysts at Celeste Funds Management.
The team informed clients in a memo that the company put out a strong trading update early in July.
"Despite continuing supply chain constraints on new vehicle deliveries, Eagers upgraded PBT (adj) guidance to $195m for H1 2022, compared to profit guidance between $183 million and $189 million provided in May, noting growth in the order bank and the benefits from on-going productivity and cost-out programs."
The Eagers share price rose more than 5% that day then kept flying for the rest of the month — to end up 29% higher than when July started.
The party has only just begun
Despite its spectacular performance, the Celeste team feels like there is more to come.
That's despite Australians potentially having less to spend on big-ticket items as interest rates rise.
"While we are cognisant weakening macro conditions could be a drag to consumer sentiment, we believe Eagers' short-medium term earnings growth will be supported by an elevated order book, in addition to a strong balance sheet that will support organic and inorganic growth."
The impact of higher interest rates on the business itself was also notable.
"Net corporate debt of $13 million had also materially improved compared to $128 million as of the 31st of December 2021."
Eagers Automotive is due to release its interim results on 25 August.
Insiders loving the outlook for Eagers
Company executives and directors sell their shares in the business for all sorts of reasons. Perhaps they need some cash to buy a new boat, pay private school fees, or to go on a lavish overseas holiday.
But there is only one motivation that they would have to buy stocks in their own business. It's that they see a positive outlook.
After all, why would they want to put their own personal money in danger?
With this in mind, it was interesting to note Eagers non-executive director and Sydney Roosters chair Nick Politis buy up shares like there was no tomorrow.
The Motley Fool reported that Politis bought up a total of $1.5 million of Eagers stocks over July.
"Despite the Eagers Automotive share price surging 26% in a month, the company's non-executive director, Nick Politis is continuing to increase his holdings," wrote The Motley Fool's Aaron Teboneras.
"This means that Politis now has over 70.36 million Eagers Automotive shares and is its largest shareholder by some margin."
The Eagers Automotive share price closed 2.36% higher on Friday at $13.
