Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, auto parts retailer AutoZone (NYS: AZO) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at AutoZone's business and see what CAPS investors are saying about the stock right now.
Memphis, Tenn. (1979)
Chairman/CEO William Rhodes, III
Return on Capital (average, past 3 years)
$116.8 million / $3.5 billion
Advance Auto Parts
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 31% of the 555 members who have rated AutoZone believe the stock will underperform the S&P 500 going forward.
[AutoZone's] management has identified two factors as having statistically significant correlation with their sales growth: (1) miles driven and (2) # of vehicles 7 years or older on the road.
Regarding point 1: the average price of gasoline is a significant factor in determining the number of miles driven for average people. While prices have declined since the end of their last fiscal quarter, it has been increasing recently and likely only going to continue to grow. ...
Regarding point 2: as fuel costs take a greater chunk out of consumers' wallet, they have less money to potentially put toward a new vehicle. Therefore, the number of 7 yr vehicles on the road may continue to trend in [AutoZone's] favor.
These 2 points sort of cancel each other out in the short term, but I think that in the long term [AutoZone's] prospects are dimming. Increasing fuel costs are almost a certainty, and should the economy continue to see signs of improvement, people may begin to ditch their old clunkers and embrace new automobiles.
If you want to retire rich, you need to protect your portfolio from any undue risk. Luckily, we've found another retail play we are incredibly excited about -- excited enough to dub it "The Motley Fool's Top Stock for 2012." We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won't be here forever, so click here to access it now.
Want to see how well (or not so well) the stocks in this series are performing? Follow the newTrackPoisedToCAPS account.
At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.