This Car Stock Gets a New CEO and a Price Bounce

Shares of this car stock could be ready to rebound on several catalysts. I’ll reveal why I’m buying shares of Advance Auto Parts, AAP, and three strategies to profit. Get 12 free fractional shares when you deposit any amount and start investing on Webull [limited time] https://mystockmarketbasics.com/webull

Advance Auto Parts has over 4700 shops and 319 WorldPac branches across North America and Puerto Rico as well as 1200 independently owned CarQuest-branded stores. When Tom Greco took over as CEO in 2016, the company was a $9.5 billion market value and 35% of market sales among the big three parts retailers with O’Reilly and Autozone.

Up to that point, the stock had kept up with rivals. Here we see over the three prior years, shares of Advance Auto Parts outperformed Autozone by five percent though O’Reilly pulled away from both.

Over the last seven years, AAP management blunders have stripped $6.2 billion from the stock’s value and the company has fallen to just 27% of sales among the big three. Up to 2019, the shares underperformed competitors but kept pace fairly well. It was at that point that things fell apart fast. AAP stock has now fallen 57% over Greco’s tenure and underperformed both its rivals by more than 280% over the seven years.

At one point, the company tried to preserve margins by keeping prices high even as competitors were cutting prices. That led to weaker sales growth and then management fumbled profitability as well. The operating margin fell from 8.5% in 2015 to just 6.4% last year. The slow sales growth sparked an investor exodus as earnings tumbled. Greco announced his retirement earlier this year but had one last parting gift for shareholders, an 83% dividend cut in May.

But with a new CEO and two other catalysts, AAP stock could be too cheap to ignore and I’m buying the shares.

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Disclaimer: Joseph Hogue and Webull are independent and unaffiliated persons. The opinions expressed herein are those of Joseph Hogue/Let’s Talk Money and not those of Webull or its affiliates. This is not a recommendation or solicitation to buy or sell securities. Webull Financial LLC is a member of FINRA and SIPC. More info at webull.com/disclosures.

Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through dividend stocks, investing and ways to make more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.