NEW YORK (TheStreet) -- TrueCar (TRUE)  has disrupted the way cars are sold by sparing consumers the indignities of negotiating the price of their car -- one of their largest purchases ever. Instead, consumers can go online, select the color, model and features of the car they desire and up comes the manufacturer's suggested retail price.

Buyers give their contact information to the TrueCar Web site and a dealer can contact them. Or, they can print out a guaranteed savings certificate to get the price they expect. No more messy negotiations with hard-selling car salesmen.

While TrueCar nearly went bust in early 2012, it has now regained its footing and the company -- and the stock -- are poised for greater growth. You still can't buy a Tesla  (TSLA) car through the service, but virtually all the major branded vehicles are available through TrueCar's network: General Motors (GM) , Ford (F) , Chrysler, Honda (HMC) , Toyota (TM) , Mercedes-Benz, BMW, Infiniti, Lexus, Jaguar, Land Rover, Acura, Porsche, Maserati, Volkswagen, Nissan (NSANY) , Mitsubishi, Mazda, Hyundai, Subaru and more.

We were so impressed by the company's business model that we ended up adding the stock to our Breakout Stocks portfolio. The company is truly a disruptive force in the way automobiles are sold in the United States.

After its founding, TrueCar did have its problems. Towards the end of 2011 and early in 2012 TrueCar almost went out of business as it struggled to find the right balance of working with its dealer customers (and not antagonizing and alienating them) while trying to protect and offer value to consumers. In the first quarter of 2012, TrueCar saw its certified dealers shrink by 35%. TrueCar has shown strength in dealer additions since the second quarter of 2012.

November new car sales figures have just recently hit the market with a November SAAR (seasonally adjusted annual rate) of 17.2 million, which is the best November result in a decade. The domestic auto industry continues its rebound and TrueCar, which accounted for 3.7% of new cars sold in the third quarter, up from 2.6% last year, is a great way to capitalize on that trend. In the third quarter, users on the company's platform accounted for 172,000 unit sales across the TrueCar certified-dealer network in the third quarter, 47% higher than the 117,000 units recorded last year. TrueCar consumers accounted for nearly 15% of new vehicle sales for the average TrueCar certified dealer.

The company showed solid operating leverage in the quarter, delivering adjusted Ebitda of $3.9 million, for year-over-year growth of 60%, and up from $1.8 million in the second quarter. Ebitda margin was 6.8%, which was well ahead of the 4% to 5.5% guidance management issued last quarter.

Through its more than 9,000 active dealer partners, the company gives consumers a negotiation-free experience and makes pricing transparent. The company is seeking to branch its offerings into adjacent markets and plans to offer a trade in product, a loan platform and a leasing platform in the future. We also see the company's growing OEM (original equipment manufacturer) incentives programs, for which they currently service 12 brands, as a driver of potential upside.

TrueCar charges a dealer $299 for each new car sale it successfully brings to the dealer and $399 for each successful used car sale. Dealers love the service, because it costs them less to acquire a customer via TrueCar than if they tried to woo the customer on their own. TrueCar delivers a customer who already wants to buy a particular car to the dealership. Dealers then have to spend less time on "selling" the customer. It also increases their volumes, which, in turn, gets them better pricing on new cars. About 80% of TrueCar's sales are derived from new cars; the balance is from used cars.

We initiated our position in TrueCar in October, on the day that Warren Buffett's Berkshire Hathaway  (BRK.A) (BRK.B) announced it was buying Van Tuyl Group, a privately held auto dealership group that is the fifth largest in the U.S., which we viewed as validation of the health of the auto industry.

We see TrueCar as a game changer and believe the road forward for the company will be an interesting ride.

To read about other market disrupters and stocks about to break out, go to www.breakoutstocks.com

In keeping with TSC's editorial policy, Bryan Ashenberg doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He appreciates your feedback; click here to send him an email.

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