TrueCar (TRUE), which has been a big mover for FUNDX since he bought it June 9 at $7.09 (+75%), is an attractive turnaround story. It's an online platform that allows consumers to compare prices actually paid by other car buyers in their area. After a period of angering car dealers, TrueCar hired a new CEO, Chip Perry, who has a great track record as he grew AutoTrader.com into a behemoth. TRUE has made a number of important changes and the stock has rebounded nicely.

04-Nov-16
08:52 ET
FUNDX Fundamental Investor: TruCar (TRUE) trading at new 52-week highs today, above $12 now; stock is up +71% since I bought it on June 9 at $7.09

Recent analysis:
TrueCar (TRUE) is up sharply in the pre-market at $10.80 (+17%) albeit on light volume, so we'll see where it opens. They reported some nice Q3 earnings last night.

What stands out to me first off is that they reported a non-GAAP loss of just $(0.01) so they are getting close to profitability and it was $0.05 better than consensus. They have now had back-to-back $0.05 EPS beats after a miss in Q4 and an in-line result in Q1. So that's a nice trend. There was also some revenue upside (see InPlay archive for details). The Q4 revenue guidance was just in-line but that's ok, they are usually pretty conservative.

The other thing that stands out is its improvement in margins. While TRUE is not yet profitable, it is reporting positive cash flow. Adjusted EBITDA margin (a good proxy for operating cash flow) came in at a respectable 7.7% vs 3.7% in the prior year period.

A couple of highlights from the call:
• AN Back in the fold: Nearly all of AutoNation's (AN) dealerships (AN is the largest car dealer in the US) are now back on the TrueCar program. TRUE sees this as a huge milestone and it happened much sooner than anticipated. AutoNation told TRUE that the Dealer Pledge, which was announced and rolled out at the end of March 2016, was the main reason they decided to put TrueCar back into their marketing mix. AN bailing on TRUE was a big reason the stock tanked in early 2016 and chatter that AN getting back in the mix was a big reason I bought the stock.
• Website/App Improved: TRUE made some key changes to the website/app. TRUE says in what was perhaps the biggest story of the quarter was improving its price report page and registration flow. It now more clearly spells out the benefits to the consumer, thereby pulling more real car buyers to TRUE's online experience. Also, many consumers did not understand the benefits of proceeding all the way through TRUE's experience, but the website/app changes made those benefits more clear and drove significant increases in conversion rates.

Also, of note, Craig Hallum upgraded the stock today to Buy from Hold and raised its price target to $14 from $11 as they believe that TRUE is well-positioned to take a much larger share in the car-buying market. Loop Capital also upgraded TRUE today.

Overall, I am still liking TRUE, I think there is more upside although the stock has been a bit choppy lately. TRUE has been a nice mover since I bought it on June 9 at $7.09 (+52% including pre-mkt move). Of note, my other holdings SPNS (before open) and MXL (after close) are set to report on Monday.