LAD Lithia Motors Inc

Lithia Motors (LAD) was one of the top performing Zacks #1 Rank (Strong Buy) stock on Tuesday, rising 7.6%.

Lithia Motors is an automotive retailer, selling new and used cars and light trucks.

The stock jumped after Lithia reported strong first quarter results in late April but has been choppy over the last month as the market has shown some weakness.

First quarter results were outstanding, with EPS coming in 70% above the Zacks Consensus Estimate. Revenue for the quarter was $603 million, well ahead of the $533 million consensus. It was a 31% increase over the same quarter in 2010.

Revenue was up in each segment, but new vehicle sales really drove the top-line, rising 45%.

Management gave bullish guidance for 2011 based on strong Q1 results. The company expects revenue between $2.5 and $2.6 billion with earnings per share of $1.42 to $1.50. Analysts revised their estimates significantly higher, sending the stock to a Zacks #1 Rank (Strong Buy).

The 2011 Zacks Consensus Estimate is currently $1.42, on the low end of guidance. This corresponds to 51% growth over 2011 EPS. The 2012 consensus estimate is $1.61, representing 13% growth.

The valuation picture looks attractive with shares trading at 11.7x forward earnings, a discount to the industry average of 14.9x. Its price to book ratio of 1.3 is also well below the industry average of 2.0.

Its PEG ratio stands at just 0.4 based on a 5-year growth rate of 33%.

Meanwhile, Modine Manufacturing (MOD) jumped 6.6% after reporting better than expected fiscal Q4 results.

Modine manufactures heat transfer equipment used in vehicles, heating, ventilation and air conditioning equipment, off-highway and industrial equipment, refrigeration systems, and fuel cells.

Sales for the quarter jumped 22% to $397 million, well ahead of the Zacks Consensus Estimate of $381 million. The gross margin expanded 100 basis points to 15.1%. Earnings per share came in at 26 cents, crushing the Zacks Consensus Estimate of 16 cents.

Expect estimates to rise over the coming few days.

Shares currently trade at just 13.5x forward earnings, in-line with the industry average. It sports a PEG ratio of just 0.9 based on a 5-year growth rate of 15%.

Other notable top performing Zacks #1 Rank stocks from Tuesday include: Graphic Packaging Holding Company (GPK), which rose 7.1%, Majesco Entertainment Company (COOL), which jumped 6.2%, and Frontier Oil Corporation (FTO), which was up 5.9%.

To see the full list of Zacks #1 Rank (Strong Buy) stocks click here.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

 
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