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Consumer-discretionary stocks in the S&P 1500 have outperformed the broad index so far in 2021. The sector, with an average Quadrix Overall score above the S&P 1500 average, is also expected to generate better sales and earnings growth this year as well as next year. Yet, consumer-discretionary stocks trade at a discount based on average projected price/earnings ratios.

One top pick in this sector is AutoNation (AN), the nation’s largest car-dealership chain. The company is benefiting from tight inventory, causing prices to rise and profits to skyrocket. In the June quarter, per-share earnings surged 243% and revenue increased 54%. An expanding footprint should help drive growth. AutoNation plans to open 130 used-car stores by 2026 where customers pick up cars purchased online.

Earnings estimates for this year, 2022, and 2023 have risen sharply over the past 90 days. For 2021, the consensus calls for per-share profits of $15.01, up 111%, on revenue growth of 25%.

A high-profile hire could help sustain growth. Longtime auto-industry executive Mike Manley will become CEO in November. The former head of Fiat Chrysler, Mr. Manley helped expand that company’s Ram Truck and Jeep brands. AutoNation is a Best Buy.

CarGurus (CARG) lives in the fast lane. The company’s online automotive marketplace allows dealers and car owners to buy and sell new and used vehicles.

With operations in the U.S., Canada, and the U.K., CarGurus generates subscription revenue from auto dealers. Subscribers totaled 30,727 dealers on June 30, up 24% from 2017. In the June quarter, the company’s growing online presence recorded more than 40 million average monthly unique visitors.

A severe shortage of vehicles, including previously owned ones, is forcing car dealerships to go to great lengths to acquire inventory. Recently, CarGurus launched a service that allows dealers to purchase used cars directly from private sellers for cash.

A favorable backdrop has helped fuel robust growth. June-quarter earnings per share surged 115% on revenue growth of 130%. For 2021, Wall Street expects per-share profits to climb 30% to $1.39. Revenue is expected to advance 50%. CarGurus is being initiated as a Buy.