Group 1 Automotive

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Small-cap auto dealer Group 1 Automotive ( GPI) operates 129 auto franchises at 100 dealerships in the US and the UK. The firm also owns 22 collision service centers stateside. While auto sales have been under significant pressure in the last few years, investors' fears have largely been unfounded. Selling cars may be a capital-intense business, but the most financially vulnerable dealerships closed their doors during the depths of the 2008 financial crisis.

Now, with credit flowing more freely once again, dealers like Group 1 are seeing a return to normalcy in their financial performance. Group 1's sales are already approaching their pre-recession highs.

While car sales aren't a dying business, they're also not a growth business here in the U.S. To combat that, Group 1 is another stock that's been pushing abroad. The company already holds a significant presence in the UK, but now, a bigger push to Europe could spell growth for Group 1. Domestically, a focus on selling higher-margin products (like service contracts for used cars) should spur some top-line growth in the near-term.

Last week's 18% dividend hike brings Group 1's dividend payout to 13 cents per share each quarter, a 1.27% yield at current prices.

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-- Written by Jonas Elmerraji in Baltimore.

At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, based out of Baltimore, is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on

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