CarMax Inc (KMX)

CarMax stock forecast: buy or sell

CarMax stock outlook

  • CarMax stock exploded 4.66% to close at $91.35 on the stock market today.
  • Price is drawing a scaled uptrend since mid-March with higher tops and higher bottoms. This rally marked a 143.02% gain
  • CarMax, Inc., through its subsidiaries, operates as a retailer of used vehicles in the United States. The company operates in two segments, CarMax Sales Operations and CarMax Auto Finance.
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Please read:
The viewpoints expressed in this article are personal and not recommendations for you to buy or sell stocks. The author of this article does not have any knowledge of the particular scenarios of the reader, his or her own financial statements or his or her own best interests at any given time. All users should speak with their financial advisor before buying or selling any securities Thoughts are posted for informational motives only

CarMax stock chart overview

Should I buy CarMax stock?

Even if you are a experienced or a novel trader, best trading results come from using an investing strategy that never leaves to random or subjective opinions when is the best moment to buy or sell stocks. Trading strategies are meant for helping you in the decision process of what stocks to pick and when is the best moment to buy them. At Stocks2.com, we like to use very simple but trusted and powerful trend following trading strategies. Simple things usually work the best

Is KMX stock a buy?

Currently, CarMax stock matches one trading strategy:

Uptrend buy setup

CarMax stock is in an uptrend since in mid-March that so far has marked a gorgeous 143% gain. Price marked a local bottom in this uptrend at $85.42 on June 29, and since then it bounced off a 6.94%. Now, it's only 8.33% away from breaking out over its last top and resume the uptrend. The new entry point is therefore at $98.96. If you decide to enter this trade, the suggested stop loss is at $89.06

Buy setupBuy pointStop lossRisk
Uptrend buy setup$98.96$89.0610%
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Should I sell CarMax stock?

Knowing when to sell a stock is even more difficult than knowing when to buy it. Trading strategies allow us to avoid impulsive decisions based on our personal feelings or the noise that surrounds the market. We like very simple setups to guide us on when is the best moment to sell a stock. Be aware that these setups are not intended for selling short CarMax stock

As a rule of thumb, you should not mantain an investment that shows a losses greater than those expected at the time of purchase. When to sell your stock must always be ruled by the stop-loss (automatic or manual)

Is it time to sell CarMax stock?

In the current situation of CarMax there is not any eligible sell setup, so CarMax stock holders with operations in profit can keep their positions

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Analysts' recommendations to buy or sell CarMax stock

Brokerage firms and financial institutions post stock ratings based on their views of the market and the fundamental and technical situation of the analyzed stock. Unfortunately, the accuracy of these predictions is not very high, and certainly not a direct buy or sell signal

In the last month, 7 ratings were published for CarMax. General sentiment is bullish, with 7 out of 7 posting optimistic outlooks

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CarMax ratings

Brokerage firmRating
Jun 16th, 2020
Wedbush BuyBuy
Jun 19th, 2020
Oppenheimer Strong buy
Jun 22nd, 2020
Morgan Stanley Buy
Jun 22nd, 2020
Royal Bank of Canada Buy
Jun 22nd, 2020
Stephens Buy
Jun 23rd, 2020
Argus Strong buy
Jul 2nd, 2020
Oppenheimer Buy

Technical analysis

Since in mid-March, CarMax has been drawing an uptrend that by now marked a gorgeous 143.02%. The price action shows higher highs and higher lows, and along the way provided some entry points for those who wanted to invest. Latest pullback was on June 29, when price bounced at $85.42. Like in all uptrends, price needs to take breath and now price is moving in a range between $98.96 and $85.42

SMAs overview

A favorite tool of many traders are the moving averages, that easily show trend direction. A moving average is calculated as the simple mean of the previous N periods (usually sessions). Usual time periods used for moving averages are 21 days, 50 days, 100 days and 200 days. Learn more about Moving Averages from sources like Wikipedia and Investopedia

Supports and resistances

Technical analysts use supports and resistances as a way to find price points on a chart that may work as barriers, containing the price of an asset to move up or down. A support level is a level where the price may stop as it falls. Price is more likely to "bounce off" this level rather than break through it. Nevertheless, if the price breaks down the support, it is likely to continue declining until meeting another support level. On the other hand, resistance levels are where the price may find opposition as it moves up. In the same manner, this means that the price is more likely to "bounce off" at this level, and if it finally ruptures this level, it will rise more easily until it meets the next resistance

The current resistances are:

  • R1: $92.01 (0.72% above)
  • R2: $92.58 (1.35% above)
  • R3: $94.01 (2.91% above)
  • The current supports are:

  • S1: $89.40 (-2.13% below)
  • S2: $86.18 (-5.66% below)
  • S3: $85.42 (-6.49% below)
  • Bollinger bands

    This is an indicator that was introduced in the 1980s by John Bollinger. It is composed of three lines that are drawn superimposed on the price evolution chart:

    • The central band is a moving average, usually a simple moving average calculated with 20 periods
    • The upper band is calculated by adding to the value of the simple moving average 2 times the standard deviation of the moving average
    • The lower band is calculated by subtracting from the simple moving average 2 times the standard deviation of the moving average

    Relative strength index

    The RSI (Relative Strength Index) is an oscillator-type indicator that gauges price fluctuations to spot when the price of a share or financial asset is oversold or overbought. Like other oscillation indicators, the RSI ranges from 0% to 100%. J. Welles Wilder introduced the relative strength indicator in the late 1970s and since then it has been widely used by traders

    The RSI dropped below the overbought level of 70 in early June after just crossing to the overbough zone for 1 day (weak signal). The RSI value today was 54.89. Since RSI lost the overbought zone, CarMax stock dropped a 7.12%

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    Earnings and financials

    CarMax hosted the quarterly investors call and posted the second-quarter report in mid-June. CarMax reported second-quarter earnings of $0.03 per share on sales of $3.5 billion. The analysts estimate was $0.04 per share on revenue of $2.7 billion.

    Compared to the same quarter one year ago, EPS was $1.59, so posted EPS means a reduction of -98.11%. Looking at revenue, figures dropped a -34.61% compared to $5.4B year over year.

    CarMax is releasing Q3 financial report next September. Expected earnings per share (EPS) for this quarter is $0.83. Financial reporting day has a more than usual risk for investors as the data posted can gap up or down the stock price with very low volume and not honouring your buy/stop-loss orders. You can find more information about the earnings conference call and the financial reports on the Investor Relations section of its website: http://www.carmax.com.

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