Will Pep Boys Crash This Sector?

In today's edition of "Talking Stocks," Austin reacts to the news that Gores Group is pulling the plug on their offer to take over Pep Boys.

This is a big indication of future weakness for other companies in this sector. While Gores Group may have seen something in particular about Pep Boys that scared them off, Austin thinks it was the right call. Automotive service and parts retailers had a great run over the last few years as consumers hung onto their cars longer and put off the expensive purchase of a new automobile. But now the levees look like they're about to burst as the average age of the automobile has hit an all-time high. The company is showing signs of strength, albeit at a slow pace. Austin thinks the sun has set on what's been a great sector over the last few years and automakers like Ford and General Motors sell increasingly more vehicles.

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At the time thisarticle was published Austin Smith has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford and Zipcar. Motley Fool newsletter services recommend Ford, General Motors Company, and Zipcar. 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 Motley Fool has a disclosure policy.

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