Advance Auto Parts: Pull-back creates Buy opportunity

Posted Sep 18th 2009 4:15PM by Joseph Lazzaro
Filed under: Stocks to Buy

Advance Auto Parts (NYSE: AAP) has pulled-back about $4 since first recommended on May 19, 2009 at a price of $43.38, but view that as a Buy opportunity.

That's because an argument can be made that auto repair represents one of the best sectors over the next one-two years. Here's why:

The increase in the average U.S. vehicle age, less-than-ideal new conditions for new car purchases, and a recession that's created the era of the 'frugal consumer' all bode well for AAP, for an obvious reason: more Americans will have to keep that used car in-shape because a new one is not their future.

Technically, AAP has dropped below its 50-day moving average, and if that persists it would be a concern; but as of now, it signals a better price to scoop up shares. The First Call FY2009/FY2010 EPS estimates for AAP are $3.05 to $3.44.

Stock Analysis: Advance Auto Parts is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in APP now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your AAP position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $22.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: AAP, Advance Auto Parts, AdvanceAutoParts

Print this

Reader Comments (Page 1 of 1)

12-14-2009 @ 8:21AM

chevymotor3 said...

Research Chevy 350 motors, engines, and purchase quality Chevy and GM 350 motors. You will

find helpful information, stats, and articles about the GM Chevrolet 350 (5.7L) motor and

its use on boats, trucks and passenger cars.

chevy 350 rebuild