KAR Auction Services' Shares Jumped: What You Need to Know


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of vehicle auctioneer specialist KAR Auction Services (NYS: KAR) revved up an early 11.3% gain before falling back to a more modest 3% gain, all on spasms of heavy trading in otherwise light action.

So what: A glowing value-based recommendation, published after hours last night on Seeking Alpha, inspired an impressive but low-volume and quickly erased price spike. Such is the market-moving power of popular blogs when dealing with thinly traded stocks like KAR.

Now what: If you like the used-car market, KAR stands about a belly button below quality competitors Comerica (NYS: CMA) and Copart (NAS: CPRT) in nearly every department. KAR's operating margins are about half of Copart's or Comerica's, and its growth engines have stalled. Some stocks are cheap for a reason, and this one looks like a lemon. Back to the dealership you go.

Interested in more info about KAR Auction Services? Add it to My Watchlist.

At the time thisarticle was published Fool contributorAnders Bylundholds no position in any of the companies mentioned.Motley Fool newsletter serviceshave recommended buying shares of Copart while another recommended shorting Copart. They call us "Motley" for a reason. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check outAnders' holdings and bio, or follow him onTwitterandGoogle+. We have adisclosure policy.

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