THE AUTO STOCKS EDITION
22 DECEMBER 2011
ONE YEAR AGO IN THE LIFE OF A STOCK
IAS Advice on O'Reilly Pans Out to the Tune (Up?) of 30%!
The news media loves to look back at what they famously call The Year In Review as we approach the changing of the guards on New Year's Eve, greeting 2012 and bidding 2011 good-bye. Although your reporter doesn't intend to review every single amazing stock we've touched on during the past year here at StockCentral, she was struck by the recent observations of SC founder Doug Gerlach on O'Reilly Automotive, Inc..
Jimmy Buffett may rightly stake claim to the saying, "It's Five O'Clock Somewhere," but we here at StockCentral believe that no matter the economic times, "There's Always a Bull Market Somewhere!" From Doug's Dec. 13 analysis on O'Reilly:
"O'Reilly Automotive (ticker: ORLY) was trading at $61.13 when we profiled the company for the January 2011 issue of the Investor Advisory Service. At the time, we gave shares a buy-up-to price of $64. How has the company performed since then?
"There's always a bull market somewhere! When we recommend O'Reilly Automotive in 2010, the S&P 500 was at 1,228. It recently closed at 1,257, up 2%. An investor holding an S&P 500 index fund would have earned about 4% during the period, including dividends. By comparison, O'Reilly closed recently at $79.53, a return of 30%.
"In our feature, we noted the company's counter-cyclical nature. Between 2005 and 2009, new vehicle sales had fallen from over 17 million units to fewer than 11 million, as tough economic times kept people in their old cars longer. That meant increased demand for auto parts, and the replacement parts industry turned into a very good one for investors during those years. ORLY stock had already rallied 60% in 2010 when we highlighted the shares, but we thought they had more room to run."
Read the rest of the IAS staff's comments and insights on this stock in the Investor Advisory Service. And don't forget, StockCentral members save 50 percent on IAS subscriptions. What are you waiting for? Though there's a pricetag on the subscription, the information is priceless! Subscribe today!
On to more of this week's headlines . . .
WITH COLD TEMPERATURES AND ICY ROADS AHEAD …
Is Advance Auto Parts a Buy?
Speaking of auto parts, as a lifelong resident of Michigan, your reporter knows that Mother Nature can dish out the most brutal of winter conditions. She also knows that below-zero temperatures and windshields covered with thick ice are no picnic for her — or her 2003 Rendevous. Though we've so far enjoyed a warmer-than-average fall in many parts of the country — perhaps lulling us into a false state of security? — with the official passing of the Winter Solstice, Old Man Winter just waved the green flag.
For many of us who live in the coldest parts of the country, that means an accelerated need for auto parts, as severe temperatures bring out the worst in our daily drivers. But could there be a silver lining in the opportunity to acquire shares of Advance Auto Parts (AAP)? SC Member Jeff Traeger pondered that very question in The Classroom:
I just completed an SSG on AAP — Advance Auto Parts — an investment idea presented at the last BetterInvesting 5 in 5. It is an interesting stock and my analysis shows the stock as very close to being a buy.
There is one point that bothers me. All the chart lines — sales — profits — cash flow — are headed in the right direction. A major stock buyback program has the shares outstanding tailing down, but the book value per share is headed down, too. Looking at the balance sheet for 2009, 2010 and 3Q 2011 the following values result from dividing the shares outstanding into the stockholder equity: $13.69, $12.68 and $10.75.
So why is it good for me as an investor for the company to buy back shares and have the book value per share go DOWN? Is this an accounting oddity? Am I doing the calculation wrong? It just seems illogical that the buy back has a negative impact, although the company's performance is strong. I'd think that the buyback would be neutral on the balance sheet with the money to buy back the stock coming from the asset side of the ledger and offsetting reduction in the liabilities in the stock account. What am I missing?
By the way, in going through this exercise, I noticed that the stock is selling for 6+ time book value, which bothers me, too.
What's your take on Advance Auto Parts? Are the company's shares ripe for the buying, or not so much? Join the conversation with Jeff Traeger in The Classroom and don't be shy — share your thoughts and insights!
TAX DAY IS COMING FAST
Pre-Order 2011 Federal and State Tax Printers and Save!
Ah, the holidays. The cheer, the jingle of bells, the sounds of reindeer hooves on your rooftop, the clinking of champagne glasses as the ball drops in Times Square. Though this is certainly a cause — and a pause — for celebration, your reporter cautions you not to find yourself lulled into a false sense of security. Tax season is just around the corner. And Uncle Sam will have his hand out before you know it.
If just the mere thought of getting the calculator out and organizing all your 2011 paperwork fills you with dread, and you're looking for top-notch support, you've come to the right place! Get your investment club ready for tax preparation early by pre-ordering your Federal and State Club Tax Printers from ICLUBcentral — the No. 1 tax preparation software for investment clubs.
The Federal and State Tax Printer software retails for $89.99 (a fraction of the cost of a professional tax preparation service), but many discounts are available. But act now — our special early bird pricing ends at the stroke of midnight on Dec. 31, 2011! Get a jump on Tax Season and pre-order your Tax Printers today.
Year-End Holiday Schedule for ICLUBcentral Support
Happy Holidays to All!
Please note that ICLUBcentral's offices will be closed for several days at year-end in order that our staff can celebrate the holidays with their families. On these days, our phone lines will not accept calls for sales or technical issues, but you may request help using our online system and we will address your inquiry during the next available workday.
The dates of the coming office closures are:
- Friday, Dec. 23, 2011
- Monday, Dec. 26, 2011
- Friday, Dec. 30, 2011
- Monday, Jan. 2, 2012
Many investment club treasurers will use the holidays to close their club's books and start preparing their investment club tax returns. Although the early bird pricing for the Club Tax Printers expires on Dec. 31, 2011, we recommend that clubs not wait until the last minute to place their order. Pre-order your Club Tax Printer today.
We express our sincerest wishes for a happy new year, and look forward to serving you in a prosperous 2012.
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TODAY'S ENTIRELY RELEVANT QUOTATION
"Cheers to a new year and another chance for us to get it right."
— Oprah Winfrey