This column was originally published on RealMoney on Oct. 16 at 10:25 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.

I came across Asbury Automotive Group ( ABG - Get Report) a couple of months ago when the car retailer began paying a 20-cent quarterly dividend. The 3.5% yield is about twice what the average S&P 500 company offers and can be comfortably covered 2.4 times with the $1.88 a share in earnings that analysts expect Asbury to deliver for the full year.

The stock was then effectively placed on the back burner of my mind until the company posted better-than-expected preliminary earnings last Thursday. At $22.92, Asbury is now up about 40% on the year, and trading at an all-time high. In relation, its larger competitors AutoNation ( AN - Get Report) and CarMax ( KMX - Get Report) are down 4% and up 59% year to date, respectively.

While the sector as a whole seems to be catching a bid, it appears that Asbury's key advantage is that it primarily sells import brands like Honda, Nissan, Mercedes and BMW. These cars continue to gain market share with U.S. consumers from the Big Three, though it's also worth noting that 58% of gross profit, came from its service/parts business in 2005.

Despite the recent rally, I believe that Asbury shares could trade up through the mid-$20's by the end of the year. The stock is currently valued at just 12.2 times expected 2006 earnings, and the company is on track to grow profits another 8% next year.

David Peltier is a research associate at TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Peltier appreciates your feedback; click here to send him an email.

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