Advance Auto Parts: Retailers Are Facing Headwinds

Summary

• Advance Auto Parts sells automotive replacement parts, batteries, and maintenance items for a range of vehicles.
• Elevated fuel prices are encouraging consumers to seek alternative forms of transport, including EVs, which pose a long-term threat to traditional auto-parts makers.
• DIY, slow EV adoption, and an aging vehicle population will help soften the impact of these headwinds, supporting growth in the industry.
• This is growth AAP will unlikely see, as the company has struggled against ORLY and AZO, with our belief that this will continue.
• The company's financials are independently attractive (outside of growth) but with a single-digit upside, we consider the stock a hold.

Hispanolistic

Investment thesis:

AAP was the largest automotive aftermarket parts retailer in the US at one point but has failed to capitalize on this and quickly lost market share. The company's performance in recent years has been good, with the stock price

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.