AutoZone, Inc. (NYSE:AZO)
The Company is a specialty retailer of automotive parts and accessories.
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AutoZone’s initiative to do more of direct importing of merchandise from foreign suppliers will ensure that margins continue to improve
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With todays market, it doesnt get any better. They just started a new IPO and has really been growing. This stock is a great holding stock, not for the day traders
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A value stock?? Don't make me laugh.
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coming down
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It's one of the most undervalued stock in the market today. Maybe in the short term it won't go up, but believe me, in a five year period, you will be quite suprise.
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Strong Management Team
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Growth isnt as high as I'd like to see lately, but ROE and ROA are looking good. If management can continue to deploy AZO resources effectively then we could be looking at a fantastic value opportunity here. There is pleny of room for growth in the balance sheet and income statement so Im setting my timeframe at 2-4 years.
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Continue growth and upsized stock price not in the Cards. See a downturn in the next 3 months... maybe sooner.
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AutoZone is the leading retailer of automotive parts and accessories. Each store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products. AutoZone has a high concentration of stores in California, Texas and Florida which are the biggest car markets in the US.
AutoZone largely targets vehicles which are 7 years or more old. In 2005, used vehicle sales (approximately $370 billion), comprised of nearly half of the U.S. auto retail market. There were an estimated 44 million used vehicles sold in the U.S. compared with approximately 17 million new vehicles. The performance of auto parts retail industry hinges on the number of used vehicle sales, gasoline prices and the number of miles driven annually.
The Company performed impressively in 2006 as the top line increased 4.2% primarily on account of opening of 198 new stores mainly in the US and Mexico. Domestic retail sales which contributes 84% to the overall sales grew 4% in 2006. Although, the same store sales recorded a flat growth of 0.4% affected by record level rise in the gasoline prices. However, with the recent fall in oil prices the performance on same store basis should improve in the year ahead. An increase in sale of used vehicles, sale of auto parts should continue to rise in future due to higher repairs and maintenance. Also, AutoZone’s initiative to do more of direct importing of merchandise from foreign suppliers will ensure that margins continue to improve.
We believe that increase in the store count, stable gasoline prices and increase in the miles driven will continue to drive the performance of the company in 2007.
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earnings growth will come back, multiple is way low and ROIC can't be beat
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In case you are interested, I think the opposite of my recommendation on this stock.
I made an error playing around on the format and I guess this pick on my caps for life. Just in case you are wondering why I think the opposite of my recommendation. I did a dcf that puits the IV at about 110. It has consistently high returns on capital (averaging about 20% over the last 5 years), great growth prospects in latin America, and a wonderful head of the comp committe in Edward Lamper. So it should outperform the market in the coming years by at least a couple of percentage points.
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Autozone has stumbled over the near tripling of gas prices in the past few years. Gas prices have both directly hurt their lower income customer as a significant budgetary burden and have made a dent in miles traveled on US roads. After 25 years of growing at 2.8%, miles traveled flatlined in 2005 and were lower in April 06 than April 04 in the wake of rising pump prices. Miles traveled is directly correlated to aftermarket demand and Autozone's comps have floundered in the interim. Much of this weakness has been criticized as the consequence of a Chairman Ed Lampert-led gutting of the cost structure, generating inflated and unsustainable margins. But while Autozone may have gone a bit light on allocating peak hour labor, its high margins were more the result of a larger owned land position, a lower proportion of commericial business, and subsantially higher DIY psf productivity than competitors. Competitor Advance Auto has made strides in closing the productivity gap, but recently has stalled with Autozone still holding a big advantage. What is left is the profitability, productivity, and capital returns leader in an excellent industry that sees very little promotional pricing even in difficult times, growing at 5-6% a year with 25% returns on capital and extremely high returns on equity. 10-11X NTM earnings is far too cheap for this kind of business, and Lampert's presence helps ensure that Autozone spends all of its free cash flow to repurchase stock. While soarin
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