The All Ordinaries Index (ASX: XAO) has gained 16.96% since its April lows, but this ASX All Ords stock has raced ahead of those gains.
The fast-rising company in question is Peter Warren Automotive Holdings Limited (ASX: PWR).
Shares in the automotive dealership group closed flat on Monday, trading for $1.875 apiece.
Investors who bought the ASX All Ords stock for $1.27 a share at market close on 9 April will be sitting on gains of 47.6% today.
Taking a step back, Peter Warren shares are up 7.76% over 12 months. The stock also trades on a fully franked 3% trailing dividend yield.
Looking ahead, Matthew Nicholas, deputy portfolio manager of 1851 Capital's emerging companies fund, believes the company is well-placed to outperform in the year ahead (courtesy of The Australian Financial Review).
Here's why.
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ASX All Ords stock in the sweet spot
"Car dealers have been great to invest in over the past 12 months," Nicholas said.
He pointed to Eagers Automotive Ltd (ASX: APE), whose share price has rocketed 159.66% since this time last year. Eagers Automotive shares also trade on a 2.5% fully franked trailing dividend yield.
But following on that stellar run, Nicholas expressed concerns over Eagers' elevated price-to-earnings (P/E) ratio, unlike ASX All Ords stock Peter Warren.
According to Nicholas:
AP Eagers has been the poster child, with the stock more than doubling yet is now trading on a lofty 25 times PE and confirming its status as the most expensive car dealer in the globe. On the flipside, Peter Warren Auto has been somewhat stranded and trades at 13 times.
Commenting on why he's bullish on Peter Warren Auto, he noted:
Since listing in 2021, Peter Warren has faced a series of headwinds as the economy slowed as the central bank hiked interest rates. With a customer base firmly entrenched in the "mortgage belt", those headwinds are now tailwinds which is why the company is a later-cycle beneficiary than the rest of the listed dealers.
Then there's the rapid growth of Chinese EVs.
"Furthermore, it's beefing up its presence in the Chinese electronic vehicle brands, which will continue to take market share," Nicholas concluded.
What's ahead for Peter Warren shares?
When the ASX All Ords stock released its FY 2025 results on 21 August, management noted, "Our business foundations include $229 million in owned property, low net debt of $46.7 million and a great team of professionals with deep automotive experience."
Looking to the year ahead, management said:
In FY26 we will execute our strategy, focusing on innovation as a key enabler of our long-term competitiveness, living our customer-centric culture, driving best in class operational performance, while continuing to pursue opportunistic acquisitions.
The new car market is expected to remain highly competitive with new brands competing for market share. However, we expect to grow higher margin service lines in parts, service, finance, insurance and aftermarket. As we continue to manage our costs and inventory, we expect to grow our earnings in FY26.
