Study of AAP
- 09/19/2024 – Advance Auto Parts (AAP): Why Hedge Funds Are Holding Steady Amid Market Struggles (yahoo.com)
- 09/16/2024 – A deeper dive into Advance Auto Parts | Stansberry Research
I wouldn’t be willing to call Advance a “buy” right now because there’s too great a chance that it’s a value trap. O’Kelly has been in charge for a year and things are getting worse, not better. And natey1015 is right that, in retail, things can go south in a hurry.
One of my friends, a long-time professional investor who wishes to remain anonymous, summarizes it nicely:
We have owned AutoZone for many years. I’ve always been skeptical of AAP – even when it optically looked attractive.
AZO and ORLY have consistently had good management teams – people count in every business, but especially this one. AAP has struggled and the team always seems to be the problem.
It’s kind of like baseball. The Yankees, Dodgers, and White Sox all play in the major leagues – but the Sox suck.
So I’d stay away from AAP. As Warren Buffett has said, turnarounds seldom turn.
To be clear, I’m not ruling out recommending Advance’s stock at some point. But at these levels, I wouldn’t try to be a hero by attempting to precisely time the bottom.
If O’Kelly can turn Advance around, even to a modest degree, the stock looks like an easy double. And if the company really turns around, the stock could be a 10-bagger, just as Best Buy (BBY) was from 2013 through 2021.
Personally, I would be OK waiting and watching for concrete signs of a turnaround… even though that likely means I would miss the first 50% rebound in the stock.
Best regards,
Whitney
