This was a complex call, but I'm Reiterating my Buy rating for AutoZone (NYSE: AZO), first recommended on March 30, 2009 at a price of $163.40. And meandering stocks don't feed the bulldog. That's said, we're sticking with AZO on the bullish auto aftermarket trend. The U.S. auto sector's fleet is aging: Americans will buy about 9 million new cars in 2009, which means used vehicles will become more important, in fleet percentage terms, and that points to increased auto maintenance - which is bullish for AZO. Moreover, the U.S.'s frugal consumer trend is likely to continue well beyond 2010, another positive for the auto parts sector. The First Call FY2009/ FY2010 EPS estimates for AZO are $11.71 to $13.12.
Finally, AutoZone is a defensive/growth hybrid, which means some growth had better appear, or I'll remove the stock from the Buy list.
Stock Analysis: AutoZone is a moderate-risk stock. If you already own the stock, Hold your shares. If you don't own shares, consider buying a 25% position in AZO now. Under any circumstance, don't buy more than 50% of your AZO position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $115.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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