AutoZone Keeps on Truckin'

May.25.11 | About: AutoZone, Inc (AZO)

During this recent market contraction it has been hard to find stocks that buck the trend and keep on growing. Barchart helped me find AutoZone (NYSE:AZO), a stock that still had 12 new highs and increased in price 4.78% while the general market - as measured by the Value Line Index of 1,700 stocks - is down 2.17% for the same period. As new car sales still are in a slump and the average age of the existing car get older, repairs with AutoZone parts should increase. The momentum has been impressive.

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AutoZone is the nation's leading specialty retailer of automotive parts and accessories, primarily focusing on do-it-yourself customers. The company's auto parts stores carry an extensive product line for cars, vans and light trucks, including new and re-manufactured automotive hard parts, maintenance items, and accessories. Many of the company's domestic auto parts stores also have a commercial sales program, which provides commercial credit and prompt delivery of parts and other products to local repair garages, dealers and service stations.
Factors to Consider
Technical Factors:
  • 100% Barchart technical buy signal
  • Trend Spotter buy signal
  • Above its 20, 50 and 100 day moving averages
  • 12 new highs and up 4.78% in the last month
  • Relative Strength Index 68.65% and rising
  • Trades around 296.17 with a 50 day moving average of 278.39
Fundamental Factors:
  • Wall Street brokerage analysts look for increases in both sales and earnings.
  • Analysts released four strong buy, two buy and 15 hold recommendations.
  • Sales are estimated to increase by 7.70% this year and another 4.80% next year.
  • Earnings forecasts are to increase by 25.00% this year, another 13.50% next year and continue by 13.60% annually for the next five years.
General Investor Sentiment:
  • As measured on Motley Fool 648 readers have expressed an opinion.
  • CAPS members vote 343 to 151 that the stock will beat the market.
  • The more experienced All Stars agree with a 116 to 38 vote.
Summary: Existing cars are getting older and many people can't afford a new one. Car repairs increase with the age of the cars. Analysts look for about an 8% annual total return from AutoZone over the next five years.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.