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mpapile (32.47)

Autozone ripe for shorting

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February 23, 2009 – Comments (8) | RELATED TICKERS: AZO

Guys, If you take a second from your macro economic pipe dream ("People have less money so they will not buy cars and fix their own") you could then look at this balance sheet that is REALLY BAD, and laden with massive debt. Seriously, look at the assets line and look at the liabilities line. OK, now anyone can see that is really bad.

This all reminds me of many other macro bubbles like fertilizer, solar power, dot com etc... You guys are so full of the macro/momentum picture that you completely miss out on the fact that your investment has crap fundamentals. This will fall and will fall hard. Right now it is getting pumped, prepare for the dump.

Also I challenge the macroeconomic premise that people will fix their own cars. If you know how to fix cars, you fix them usually regardless of how much money it costs. If it takes me 20 minutes to do my brakes, and to get it done, it costs 130 dollars, well unless I am making $400 an hour, it is not worthwhile to bring it in. The person that does not know how to do it will not no matter what.

8 Comments – Post Your Own

#1) On February 23, 2009 at 5:44 PM, outoffocus (22.76) wrote:

Thanks for pointing this out.

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#2) On February 23, 2009 at 5:49 PM, DemonDoug (99.81) wrote:

i wish there was an inverse ETF on AZO - this has to be the most overpriced stock on the entire market right now.

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#3) On February 23, 2009 at 5:54 PM, Imperial1964 (96.32) wrote:

The auto parts stores I visit are constantly busy.  One time I had to wait almost 20 minutes to get waited on.  But both of these places are small independents and are always rather busy.

I do not shop at Autozone and often consider red-thumbing them on CAPS because the products they sell are junk.

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#4) On February 23, 2009 at 8:30 PM, devoish (99.59) wrote:

I would not be short AZO right now. Inventory should be high right now as their "Thanksgiving/Christmas" shopping season  begins around Easter and increases through summer. This company has been buying back shares five years in a row, sales keep increasing, they are making money even after the debt is serviced. If they hit analysts numbers, and they very well could, this share price could jump. As you said, people who fix their own cars will continue to do so and their sales should not get hurt. In fact they may be able to increase prices with impunity. If more people ask their neighbor for help, or just wash and wax their own car, sales go up again.

By the same token if they miss the analysts numbers, even by a little, in this market their is no mercy. Sporting a 14 P/E is to high to green thumb, but it is a watchlist, and if it goes down to $100 it is a buy unless the earnings miss is huge.

Is $100 what you mean by "fall hard"?

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#5) On February 23, 2009 at 8:34 PM, devoish (99.59) wrote:

BTW,

Good post just for the phrase  You guys are so full of the macro/momentum picture that you completely miss out on the fact that your investment has crap fundamentals even though I disagree. Sometimes it is easy to lose sight of the trees in the forest.

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#6) On February 27, 2009 at 5:04 PM, mpapile (32.47) wrote:

I think that this can go to 75 or lower.  Who cares if they are borrowing money to buyback stock.  That does not necessarily show signs of a strong company, it shows signs of a company that is very concerned about their stock price and less so about their fundamentals.

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#7) On February 28, 2009 at 8:13 AM, devoish (99.59) wrote:

According to the cashflow statement on this website they are buying back stock and paying down their debt.

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#8) On May 28, 2009 at 3:28 PM, mpapile (32.47) wrote:

Repayment of Long-Term Debt(4.15)Repurchase of Capital Stock(375.04)

Ok sure I just made the $41 minimum payment on my CC and then bought a $3750 tv.  

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