Piotroski’s Best and Worst Large Cap Stocks

By Joel Stonington - 2011-12-06T01:37:02Z

Photograph by Chris Rank/ Bloomberg News

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Piotroski's Worst: Carmax

Business: Sells new and used vehicles in its superstores

Piotroski Score: 1

Carmax's (KMX) return on assets dropped from 11.41 percent in 2010 to 8.11 percent in 2011. Additionally, gross margins fell from 14.71 percent in 2010 to 14.5 percent in 2011.

Outlook for the Company:

Bull Case: Low inventory of new cars is forcing buyers into the higher-margin used-car market, creating opportunities for dealers, says Bloomberg Industries.

Bear Case: Bloomberg Industries says that dealer profits could also decline as consumers demand less expensive, more fuel-efficient cars in response to the weak economy and rising gas prices.