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How Auto Parts Companies Are Trading in March 2018

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Auto parts retailers’ stocks

O’Reilly Automotive (ORLY), Advance Auto Parts (AAP), and AutoZone (AZO) are the three largest auto part retailers in the US market. The stock prices of these auto parts retailers touched a new record high in the last three years. In 2017, these companies struggled with softening sales growth rates.

This dismal sales growth took a toll on auto parts retailers’ stock prices in 2017. In March 2018, these stocks saw continued weakness partly due to broader market weakness and a soft auto parts’ industry outlook for 2018. Let’s take a closer look.

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Weakness continues

On March 27, O’Reilly Automotive stock fell 2.1% on a month-to-date basis. In comparison, AutoZone and Advance Auto Parts stock also saw mixed or negative trading trends. While AZO has lost about 4.5% month-to-date, AAP has fallen ~0.7% month-to-date. During the same period, the S&P 500 benchmark has fallen 3.7%.

In 2018 so far, AZO and ORLY were trading in negative territory and had fallen 10.8% and 0.7%, respectively. In contrast, Advance Auto Parts stayed in the green with a 15.4% gain. Most of these gains in AAP stock were seen in January when its stock rose 17.4%.

Expectations in 2018

Despite a recovery toward the end of 2017, the stock prices of auto parts companies ended the year in negative territory. Respectively, AZO, ORLY, and AAP lost about 9.9%, 13.6%, and 41.1% last year. Automakers (XLY) General Motors (GM) and Fiat Chrysler (FCAU) rose 17.7% and 96.4%, respectively, in 2017.

In 2018, the auto parts industry’s outlook was dependent on the harsh winter season, which increases the wear and tear on vehicles and boosts the demand for auto parts.

In the final part of this series, we’ll learn what analysts are recommending for these auto parts retailers in March 2018.

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