AutoZone and 3 Other Auto Parts Stocks That Look Like Buys

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Morgan Stanley recently upgraded AutoZone, citing its ability to pass on higher prices to consumers.


Andrea Morales/Bloomberg

Auto parts retailers have outpaced the market for much of the pandemic. Current economic uncertainty should keep the group in the fast lane.

The share price of one such retailer,

AutoZone

(ticker: AZO), is up 1% this year. The stocks of

Advance Auto Parts

(AAP),

O’Reilly Automotive

(ORLY), as well as NAPA Auto Parts owner

Genuine Parts

(GPC) are all in the red in 2022. But with the exception of Advance Auto, they have held their ground better than the S&P 500, which is down about 20%.

Auto parts retailers have a reputation as defensive stocks—after all, car repairs can only be delayed so long, even during a downturn. There are reasons to think the stocks can keep outperforming.

“When you can buy these stocks at these prices, there’s an asymmetrical risk/return,” says Max Wasserman, founder of Miramar Capital, which owns shares of Advance Auto Parts and Genuine Parts. ”Yes, they could go down a little further, but the upside is much higher.”

Having a running car remains essential for most Americans. That gives them the incentive to keep repairing their cars, even as the vehicle fleet ages. The average car is more than 12 years old, according to S&P Global Mobility. Genuine Parts has estimated older models tend to require $800 a year in maintenance.

That is unlikely to change anytime soon. Consumers tend to delay big-ticket purchases like cars when they’re less confident about the economy, while the average price of a new car surged to $47,000 from $38,000 during the pandemic as chip shortages crimped vehicle output. Used cars hit record prices, putting them out of reach for many.

Company / Ticker Recent Price YTD Change 12-Mo. Forward P/E 2022E EPS Growth** Market Value (bil)
Advance Auto Parts / AAP $178.75 -25% 12.8 14% $10.8
AutoZone / AZO* 2,125.33 1 17.5 21 41.4
Genuine Parts / GPC 135.45 -3 17.0 13 19.2
O’Reilly Automotive / ORLY 630.52 -11 18.4 6 41.4

*Fiscal year ends in August **Year over year

Source: FactSet

The 2007-09 recession underscored the resilience of auto parts stores. The overall stock market fell roughly in half, but with the exception of Genuine Parts, auto parts retailers were largely unscathed. Shares of AutoZone and Advance Auto held their value during the downturn, while O’Reilly stock lost just 10%.

“While consumer spending in the auto parts segment did decline during the Great Financial Crisis, it declined less than overall durable goods and recovered faster” than both durable goods and overall personal consumption, notes Morgan Stanley analyst Simeon Gutman.

Nor is the specter of electric vehicles—which tend to be trickier for do-it-yourself repairs—a worry for auto parts retailers, analysts say. EVs and hybrids combined accounted for about 10% of U.S. auto sales last year, while less than 1% of cars on U.S. roads are electric.

“Absolutely EVs will proliferate; it’s not a silly argument, but it’s going to

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Pair of BOCES college students get $10k scholarships in auto tech level of competition

Two Batavia Career and Technical Education and learning (CTE) Middle Automobile Tech college students brought residence a extremely Major trophy on May 21!

Conner Gale from Byron-Bergen Central Schools, and Noah Burke from Batavia City Universities, took 1st place in the Ron Smith Memorial Automotive Level of competition that was held at Erie Community College or university and sponsored by Niagara Frontier Automotive Seller Association (NFADA).

Each individual pupil won a $10,000 school scholarship, as nicely as, a $5,000 resource scholarship.

Charlie Pfeil and Tom Hermann, representatives from NFADA, a short while ago paid out a visit to the Batavia CTE Middle to figure out these two students and also present them with their scholarship certificates.

Hermann discussed how noteworthy it was for these two significant faculty seniors to earn this competition.

“This is a really large offer for you to gain the levels of competition. In the past, the winners of the competitiveness have been persons who have graduated from substantial college and are utilized at dealerships,” Hermann said.  “This is a good accomplishment to set on your resume. The upcoming is yours.”

When requested about the levels of competition the two Connor and Noah explained that they ended up apprehensive.

“It was nerve-racking,” Noah said.  “We understood the duties that we experienced to finish but we weren’t confident of the particular issues we had to correct. But we labored collectively as a workforce.” (Just one of the responsibilities provided diagnosing and repairing an challenge with a auto that had been purposely bugged.)

Overall, equally students felt ready for the competitiveness.  “We expended time immediately after faculty planning and also invested a 7 days performing at Basil Ford in Buffalo so we could function on newer product motor vehicles,” Connor stated.  “The additional time that we put in preparing really paid off. Mr. Yates actually aided us to comprehend how to trouble fix,” Noah mentioned.

Bob Yates, Car Engineering Teacher, stated, “Conner and Noah represented Genesee Valley BOCES and my Automotive Technological innovation class in the most expert fashion. These two college students ended up so devoted and expended many hours getting ready for the level of competition,” Yates mentioned.  “This preparedness proved their achievements, and I’m so proud of Connor and Noah.”

The two Noah and Conner strategy to go after their instruction.  Conner is at present utilized at Livingston Associates and strategies to go to faculty for automotive engineering.  Noah programs to go to the State University of New York at Morrisville to analyze Automotive Administration.

Vincent Dickinson, a junior from Batavia City Educational institutions, positioned 2nd in the Ron Smith Memorial Automotive Level of competition Tire Rodeo.  This event is a timed event check of how a college student to thoroughly mounts, balances and, installs a tire.

Congratulations to Conner Gale, Noah Burke, and Vincent Dickinson.

 

Top rated picture: Margaret Poray, Govt Principal GV BOCES Batavia Campus Bob Yates, Vehicle Technology Teacher Noah Burke, Conner Gale, Charlie Pfeil and Tom Hermann, associates from NFADA.

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Johnstown pupil gets auto tech career as a result of new plan | Information

JOHNSTOWN, Pa. – Bigger Johnstown Significant College senior Cheyenne Penrod signed a entire-time work agreement with Thomas Automotive on Tuesday as the first region student to be awarded a scholarship via a method the company launched this year.

Penrod has labored for Thomas aspect-time as an automotive technician by way of her vocational co-op. Obtaining out she’d be supplied a complete-time job right after high college was thrilling for her.

“I was super-fired up,” she claimed. “I couldn’t hold out.”

The scholarship features a one particular-12 months apprenticeship at the organization that she has fulfilled by now, $1,000 in funds, $2,500 worth of tools and certain work.

There ended up four awards handed out in the Thomas marketplaces of Johnstown, Bedford and Cumberland, Maryland.

“It came out of the need to have for assistance experts,” Thomas Automotive expertise means Supervisor Keith Kuckenbrod reported of the software.

Kuckenbrod stated there are not quite a few people today pursuing the vocation, which is why the enterprise additional the incentive.

Penrod enrolled in the Bigger Johnstown University District automotive technological know-how vocational system her freshman 12 months and has worked diligently at any time due to the fact.

She credits her father, Kenny Penrod, and her uncle for her state-of-the-art skill in the trade. She reported she spent a ton of time in the garage with them expanding up, learning anything she could.

That, coupled with her curiosity in how mechanics perform, led her to the automotive tech system, exactly where instructor Thomas Mattis explained he could notify she was an adept learner and a good candidate for a co-op posture.

Cheyenne Penrod moved up through the software and sought out the Thomas position.

Mattis commended her mastery of the content and said she received the best rating on the NOCTI (National Occupational Competency Screening Institute) test that he’s viewed in his 16 decades at the school.

He joked that the “worst issue you can notify her is, ‘I really don’t assume you can do that,’ ” simply because Penrod then tends to make it her mission to complete the activity.

“She’s arrive a prolonged way,” Kenny Penrod stated, adding that she continues to impress him.

Cheyenne Penrod’s mom, Darlene Penrod, included that she imagined mechanics was a interest and did not count on her daughter to convert it into a job.

“I’m very happy of every thing she’s achieved,” Darlene Penrod mentioned.

Michael Dadey, large school principal, was thrilled about the achievement as very well. As the school’s principal and vocational director, he’s happy of Cheyenne Penrod’s achievements.

“This is a terrific chance, not only for Cheyenne, but for Thomas and our pupils,” Dadey claimed.

Joshua Byers is a reporter for The Tribune-Democrat. He can be achieved at 814-532-5054. Follow him on Twitter @Journo_Josh.

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Advance Auto Parts Stock: Old Vehicles Require Continued Maintenance (NYSE:AAP)

deepblue4you/E+ via Getty Images

Advance Auto Parts, Inc. (NYSE:AAP) is a leading automotive aftermarket parts provider in North America. The types of products sold by the company include parts & batteries, accessories and chemicals, and engine-related maintenance products, such as air filters and transmission fluid. Their customers include both professionals and DIYers. As of December 31, 2021, sales to professionals accounted for nearly 60% of total net sales.

As an aftermarket parts supplier, AAP benefits from providing automotive solutions to older vehicles that need more continuous repairs & maintenance. In the current market environment, AAP is poised to benefit from widespread affordability constraints of purchasing a vehicle.

In May 2022, the average new-vehicle transaction price is expected to reach nearly +$45K, which would be up 16% from 2021. Prices for used cars offer no better alternative, with prices up nearly 30% from January 2021. As such, there is a greater likelihood of individuals holding onto their cars for as long as they can. In fact, the average age of vehicles on U.S. roadways reached a record high of 12.2 years in 2021. For AAP, this means increased demand for brakes and brake pads, batteries, tires, and other accessories.

AAP also benefits as total vehicle miles traveled increases. In 2019, total miles driven reached 3.26T, before plummeting to 2.83T during the height of the COVID-19 pandemic. The data has since improved and is now at or near 2019 levels. With increased travel comes greater maintenance requirements.

U.S. Federal Highway Administration, Moving 12-Month Total Vehicle Miles Traveled [M12MTVUSM227NFWA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/M12MTVUSM227NFWA, May 28, 2022.

U.S. Federal Highway Administration, Moving 12-Month Total Vehicle Miles Traveled [M12MTVUSM227NFWA], retrieved from FRED, Federal Reserve Bank of St. Louis

With the wind at their back from an aging vehicle fleet and total miles driven, one would not expect AAP to be underperforming the broader market. Yet, AAP is down nearly 20% YTD, which is worse than the S&P’s 13% decline over the same period. For investors seeking an under-the-radar play in the automotive sector, AAP is one name worth extra attention.

Earnings Review and Other Reportable Events

In the first quarter ended April 23, 2022, AAP reported total net sales of +$3.4B, which was up 1.3% from the same period last year, but +$20M short of estimates.

Through the first ten weeks of the year, AAP had a strong start, with YTD comparable store sales up mid-single digits. The final six weeks, however, came under pressure from flagging DIY sales, resulting in mid-single digit declines in comparable sales.

Weighing on the DIY comparisons were the impacts of economic stimulus payments in the prior year and a slower start in the current period, especially in the northern regions, due to colder and wetter weather patterns.

Despite weakness in DIY, overall comparable store sales were up 0.6% from the prior year and 25.3% on a two-year basis. The increase represented the 8th consecutive quarter of comparable store sales growth. Likewise, both adjusted operating income and adjusted EPS grew for the 8th straight quarter.

Gross profit margins came in at 44.6%, which was

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Driving force: San Antonio picks up speed in auto business | Business

SAN ANTONIO — For a long time, San Antonio town leaders experienced tried using and unsuccessful.

Through the 1980s and 1990s, they desired to bring an automotive plant to the location — the gold common in economic progress, a earn that could produce hundreds of jobs and strengthen tax earnings.

But it wasn’t doing work. Automotive supply lines at the time had been centered around Detroit and other sections of the Midwest, not South Texas. Automakers this kind of as Saturn, Mercedes-Benz and Hyundai all rebuffed San Antonio’s recruitment pitches.

And then Toyota arrived together.

In early 2003, the Japanese automaker declared it would develop a pickup manufacturing unit in San Antonio, a final decision that capped off 6 “frantic, exhilarating” months of negotiations, as Bexar County Decide Nelson Wolff explained them in his 2008 e-book “Transforming San Antonio.” Regional and state officials put collectively a package deal of subsidies value extra than $100 million to appeal to Toyota to the South Side.

Toyota’s factory, which expense about $2 billion to establish and started generating entire-measurement Tundras in 2006, efficiently released the vehicle marketplace in the region. And its advancement has exploded in current decades.

“What Toyota does is reveal that this is, in truth, a feasible area for an automotive plant,” claimed David Marquez, director of community and economic advancement for Bexar County. “It matches our neighborhood.”

Manufacturing work in San Antonio topped 52,000 final drop, its optimum stage in a lot more than 20 many years, in accordance to the Bureau of Labor Figures. Throughout Texas, the quantity of persons performing in factories nowadays — just about 900,000 — is a little reduced than it was in 2002.

Within the manufacturing business — which contains producers of everything from satellites to quickly-food items fryers — automakers and their suppliers are soaring fast. Employment in car producing has a lot more than doubled in excess of the last two many years, a signal of the statewide shift toward motor vehicle output.

You can see their ascendancy in San Antonio.

The business truck and bus manufacturer Navistar Intercontinental in March unveiled its just lately accomplished, large-tech truck manufacturing unit on the much South facet, where it will before long pump out diesel and hefty-obligation electric vans.

Tesla suppliers, these types of as ElringKlinger AG and Saueressig, are placing up output services in San Antonio to ship elements to Tesla’s new $1.1 billion Gigafactory just exterior Austin, wherever the firm at this time can make its Design Y sedan. (The only other key automobile manufacturing plant in Texas is Normal Motors’ facility near Dallas.)

Transmission maker Aisin AW accomplished perform on a $400 million plant in Cibolo final drop, and heavy-devices producer Caterpillar builds engines at a plant in Seguin.

Toyota itself also just lately accomplished a $400 million growth of its plant, the place it soon will create the Sequoia SUV along with the Tundra pickup.

In the meantime, San Antonio’s automotive business is beginning to press outside of generation

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Changing auto insurance plan organizations mid-policy, searching for the ideal prices

Purchasing for vehicle insurance policies is just like any other significant product – it’s a excellent strategy to store all-around. There are a couple of items you ought to know when wanting for the proper plan for you, in particular if you want to make a modify.


What to know about building modifications to your auto insurance policies policy

We advised you about methods you can try to conserve cash on your automobile insurance plan by permitting businesses to keep track of your driving with an app. By tracking your driving routines, you could qualify for decreased costs and that could possibly involve switching to a new enterprise.

(Copyright 2021 by KPRC Click on2Houston – All rights reserved.)

Issue: Are there any penalties for altering vehicle insurance coverage firms mid-plan?

Solution: No. The Texas Section of Insurance points out that you have the correct to cancel your coverage at any time. You need to receive a refund of the remaining top quality.

The refund will be paid to *you* except you utilized a finance company to pay for your insurance policy. In that scenario, the refund will be compensated to that company and the quantity will be taken off what you owe on your loan. Retain in brain, if an insurance coverage firm wishes to cancel your plan, they should mail notice at minimum 10 days prior to cancellation. Your specific policy might supply for even increased notice.

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Did you know Coverage businesses examine your claims heritage?

Most insurance policies companies use the Comprehensive Decline Underwriting Exchange (CLUE) to find out your promises record. This will consist of the day, type, and reduction of claims. A enterprise can charge you extra or refuse to market you a coverage centered on the information in your CLUE report. You can get a no cost duplicate of your report each individual year. Get in touch with LexisNexis at 866-312-8076.

Discovering discount rates for car insurance policy

When browsing all over for insurance plan you should really examine in typically for any possible discounts you may well be capable to get on your car insurance policies. For illustration, if you are now performing remotely you could acquire a “low mileage” low cost. Other common special discounts consist of getting driver’s education or defensive driving, owning great grades for college students, and having a excellent driving file.

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You must also be permitted your selection of restore store

There are other legal rights you may well not know about when it arrives to vehicle insurance policies in Texas. TDI’s web site claims when it will come to making use of your car insurance plan right after an accident, you have the suitable to opt for the repair service store and substitution parts for your motor vehicle. An insurance policies business may not specify the brand name, variety, variety, age, seller, supplier, or issue of pieces or merchandise applied to fix your vehicle. Investigator Joel Eisenbaum looked into the lack of car or truck

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