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greenwave3 (69.93)

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July 22, 2009 – Comments (4) | RELATED TICKERS: AZO

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 (94.93) 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? 

4 Comments – Post Your Own

#1) On July 22, 2009 at 9:17 PM, russiangambit (29.98) wrote:

I don't know who could be recommending AZO, the stock is 100% up since November on nothing but a good story. This one is a bane of CAPS, as well as SHLD. I shorted it in real life once at $160, but got tired of waiting for it to crack and closed it at a small gain.

There is GMCR also, who would've thought coffee is so profitable. It reminds me of CROX.

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#2) On July 22, 2009 at 9:33 PM, TMFBabo (99.99) wrote:

Analysts' ratings are WORTHLESS! They often upgrade stocks after they've gone up and downgrade them after they've gone down.  Why in the world would you buy a company because it's gone up and then sell it because it's gone down? It's just too stupid for me to fathom.

I've recently red-thumbed AZO and even wrote a pitch because I was so compelled to write about what a bad company it is.  The only good thing it's got going is that the company is churning out positive EPS.  They've got management who's either flat-out stupid or corrupt the way they've run the company's fundamentals into the ground.

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#3) On July 22, 2009 at 11:14 PM, Imperial1964 (97.92) wrote:

All that and they sell sh*tty products.  I'm a shade-tree auto mechanic and the only time I bought anything from them will be the last.

I know several people who have bought parts from AutoZone and I only know one who still shops there.

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#4) On July 23, 2009 at 12:26 AM, greenwave3 (69.93) wrote:

Thank you for sharing your thoughts.

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