Marc O. Schmidt Column: The secret winner of the auto parts boom | News

The wheat is separated from the chaff, especially during the weak trading phases we are currently experiencing. While many stocks are in decline, with some even showing disproportionate price drops, there are also some that show a particularly high degree of price stability.

The reasons for the high crisis power of these chosen titles are usually relatively resilient business models. In other words, they are companies whose products or services are in high demand, even when the economy is weakening.

Autozone is gearing up for the entire market

A relatively unknown group in this country to which Autozone is exactly concerned (WKN: 881531 / ISIN: US0533321024). Since the beginning of 2022, shares of the second-largest auto parts dealer in the United States have seen prices rise by as much as 18 percent at times. For comparison: the S&P 500, in which Autozone is located, is now in the minus with a 19 percent minus.

Prove your crisis stock

This strong development is no exception to Autozone, but the rule. Because, for example, even in crises like 2008 and 2009 (the real estate and financial crisis) or 2000-2003 (the internet and technology crash), Autozone’s share grew sharply, while the overall market saw prices plummet.

Auto Zone Chart: Stuttgart Stock Exchange

Price increase: +18 percent per year

Due to these continual better results, the Autozone share has been growing like a string for many years, which means that new records have been set in a series, most recently in mid-July this year. This is also reflected in the impressive increase in prices by an average of 18 percent per year since July 2002, while the S&P 500 index has only gained an average of seven percent per year over the same period.

There is no end to the high altitude flight as the current general economic conditions provide the business with a backward wind. The gross domestic product of the United States collapsed by 1.6 percent. on an annual basis in the first quarter of 2022, after a sharp increase of 6.9%. in the fourth quarter of 2021

The need for repairs is increasing

Thus, the US economy is plunging into recession. Due to unusually high inflation (June: + 9.1%), many American consumers are reluctant to buy a new or used car. This is also confirmed by the S&P Global Mobility analysis, according to which the average time Americans drive their cars is now 13.1 years. In 2012, this period was eleven years on average.

It has been known for a long time that older used cars are also much more prone to repair. So many Americans have to drive to the repair shop or repair themselves more often. As such, Autozone benefits from both the strong demand from auto repair shops and the do-it-yourself trend. Almost 7,000 branches of the group now offer almost every product that customers need for car repair. In addition, the home page offers numerous tips for self-repair.

High profitability

As many Americans are dependent on their cars due to poor public transport infrastructure, the demand for Autozone spare parts is very high. Hence, higher purchasing costs can be added to prices and passed on to customers. This is also visible in the very high profitability. The estimated return on sales for 2022 is 20 percent.

Auto-Zone is a safe bet for investors, both from a long-term perspective and from a recession and inflation perspective, so to speak, is always a candidate for stocks. If you want to bet on ten stocks that are likely to be successful and crisis-proof in the future, you can have a look at the following index certificate (WKN: DA0ABP / ISIN: DE000DA0ABP0) on the forever stock index. In addition to Autozone, this barometer also includes Microsoft, Novo Nordisk, Nestl and Johnson & Johnson.

Image Source: Press the Autozone photo

Post Secret Winner of Automotive Spare Parts Boom first appeared on marktINSIGHTS.

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