Advance Auto Parts Incorporation provides parts for cars, trucks, motorcycles, and several other motor vehicles. The parts that they offer allow their consumers to maintain vehicles by themselves instead of going into service shops. They offer everything from motor oil to specialized engines. The company was founded in 1929.
Why You Should?
- Advance Auto Parts operate over 4800 stores in the US. The US is one of their largest markets and its citizens rely on cars and other similar vehicles for transportation. This combination is why Advance Auto Parts is a great auto part company to invest in. More cars on the road will see the company report higher sales of their products.
- Advance Auto Parts slightly benefits due to a weak economy. Consumers will not buy new cars and will cut costs on the maintenance of vehicles. Consumers will instead try to fix some small issues by themselves. This benefits the company’s sales and the company will be less affected during these tough times.
- Advance Auto Parts is one of the few large retailers that solely specialize in the auto parts industry. This benefits the company as consumers will require the assistance of employees who offer advice free of charge. This causes an increase in sales because consumers can buy the right parts which are not possible for any other regular retail company.
Why You Should Not?
- The COVID-19 Pandemic has also reduced the demands of some of the company’s products. Fewer cars on the road will cause a decrease in demand as consumers do not need their vehicles to be maintained as frequently as before.
- Advance Auto Parts faces competition from several other auto parts stocks like O’Reilly Auto Parts and AutoZone. Other companies like Walmart are also entering into this space. These companies might hurt the companies future growth.
- In the future, the economy looks to be coming slowly back to life after bottoming out during the pandemic. This will see a rise in new car sales. These newer cars will be tougher to maintain and will require traditional auto shows for any work. These cars will also require less maintenance. This will negatively impact the company’s growth in the future.
- Though the economy is gaining strength, it is by no means any close to pre-pandemic levels. Maintaining a vehicle might not be the most essential action to take with money. This will negatively impact the company until the company can benefit from a stronger economy.
I believe that individuals should put money into other stocks. Though this company benefits through its specialization in auto parts and wide reach, it still is hurt from newer cars which are harder to maintain by everyday consumers. Competition and the COVID-19 Pandemic has also hurt the company. However, the weak economic landscape may/may not impact the company.