Trust your own research.
Tonight, I was reviewing the vital stats on Autozone, Inc. (NYSE: AZO). I made a cursory evaluation based on their financials. Negative equity, slow growth, and mounds of debt. I read what my fellow CAPS enthusiasts were saying about it. I noticed one comment that blew me away given the fundamentals of AZO. I cannot believe that any self-respecting investor could rely on analyst comments instead of doing adequate research / due diligence. I can only hope we are only talking about CAPS points and not real money. Here is the comment and my response.
"Zacks Rank 1, Recommend Buy, Industry Rank 8 / 217 Target 185.00, Avg target of 18 analysts 166.81" greenwave3
) Submitted: 7/22/2009 8:41:26
Even if the stock moves up $10 and hits the target price, that still represents a movement of less than 10% from current levels. This qualifies as a "hold" technically since the expected movement upwards is less than 10%. IMHO, AZO has a lot more downside potential than anything else. Insiders are dumping, negative book and tangible book, large S/T and L/T debt, and insufficient cash flow to service it. Not to mention, the company is borrowing money to re-purchase shares since Eddie Lampert sold some shares. The price has been artificially inflated for months and I expect a pullback. How on earth is this company worth over $8 billion???
Any comments on how/if analyst comments have weight in your evaluation of stocks? Comments on AZO?