by Thomas Buff

Created on: April 24, 2009   Last Updated: April 27, 2009

Investing in auto repair companies

The Automotive Industry is facing tough times. The Detroit Big 3 are at their most vulnerable position in history as auto sales continue to drop at alarming rates. Expensive or scarce credit for vehicle purchases is scaring potential buyers away. Investors continue to face the disheartening news with no apparent end in site. There is no question that the automotive industry is in turmoil. But what is bad news for some is good for others.

The current economic climate is changing the face of investment in the automotive industry. Despite what the economy throws at us, American commuting behavior has not changed; people still need to get to work. But in the process, the motoring public has also changed its perception of how long to keep their trust steed on the road. As more drivers choose to keep their cars longer they also choose to spend their money on parts to maintain and repair them. The result is dollar signs. The chief recipients are the auto parts companies and those who invest in them.

The recent surge of auto part sales is sending the stock of automotive after market parts, accessories, tools and equipment toward the break out mode. O'Reilly Automotive Inc. (ORLY) is posting significant gains this year. O' Reilly is one of the largest retailers of aftermarket parts and operates 3,277 stores in 28 states. The companies stock recently jumped to a 52 week high of 36.17 a share and is within range of posting an all-time high of 38.84 a share. This family owned company grew 41.81% in 2008. It is expected to surpass all previous growth rates in 2009.

AutoZone Inc. (AZO) is also seeing a shift in consumer demand. AutoZone is the largest retailer of automotive parts and accessories. The company operates 4,092 stores in the U.S and 148 in Mexico. The majority of its business is providing parts and other products to local repair garages, used car dealers and service stations. AutoZone has report a second quarter profit increase of 86 percent in 2009 and sales rose 8.1% to 1.45 billion dollars. Their stock has also closed at it's the 3rd consecutive weekly high at $161 a share.

Advanced Auto Parts (AAP) Inc. stock has also been rallying on strong demand as motorists choose to repair their automobiles in place of buying new ones. The company was founded in 1929 and operates as a retailer of automotive parts and accessories aimed at the 'do it yourself mechanic''. Sales in 2009 are up 14% from last year to 1.19 billion dollars. Advanced Auto Parts Inc. has surpassed their earnings for the fourth time in four quarters. Shares of AAP have been rallying for the past 6 months and at 44.00 are in range to hit a 52-week high about $45 a share. Their growth estimate for next year is projected to be 10%.

As the auto sales sector continues its steep decline, used car dealers, independent repair shops, and automotive parts suppliers will continue to gain momentum and see larger dollar signs. "Do it yourself" motorists spent $40 billion dollars last year and that number is expected to grow this year. Do some research concerning companies that operate in the secondary automotive sector who provide parts and/or repair used cars. Their future looks bright, and so could yours.

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