Core Concepts: Gear Up With Auto Retailers

This column was originally published on RealMoney on Feb. 28 at 10:34 a.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

For students of the stock market, the retail automotive sector is full of interesting case studies. Leading companies in this segment include AutoNation (AN Quote), AutoZone (AZO Quote) and CarMax (KMX Quote).

Renowned investor Eddie Lampert has put his unmistakable stamp on the capital strategies of AutoNation and AutoZone. Both companies increased debt in conjunction with a massive reduction in the share base. However, these companies aren't unique in using this capital allocation strategy. Energizer (ENR Quote) has employed a similar tactic, with a resulting fourfold increase in its stock over the past five years.

Debt-for-Equity Swaps

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