5 Stocks Benefiting as Americans Winterize Their Aging Cars
Responsible motorists know that as the seasons change, so do their car’s needs. Each year, it’s wise to take some time to winterize with new tires, new fluids and other gear – and there’s no shortage of companies out there to fill this need. In fact, the global automotive aftermarket industry is anticipated to reach over $513.1 billion in value by 2027.
Americans have always had a love affair with their vehicles, and these days, those relationships are long-lasting. According to IHS Markit Ltd, an American-British information provider, Americans are keeping their personal cars longer, with the average vehicle roughly 12 years old. For those older vehicles, it’s even more important to prepare for the onset of winter.
So, while you're prepping your trusty vehicle for the cold months, let’s take a look at some of the companies making winter auto maintenance possible.
AutoZone, Inc. (Tii:AZO)
If you are the type to DIY your winter car care, AutoZone is probably one of your frequent stops. The largest retailer of aftermarket automotive parts and accessories in the United States with 5,885 stores domestically, reported a 12.9% increase in net sales for its first quarter ended November 21, 2020. Domestic same-store sales, or sales for stores open at least one year, increased 12.3% for the same period. Business is so strong that the retailer announced on August 13, 2020, that it would hire 20,000 new employees nationwide to meet its retail and commercial customers’ growing demands. Though pricey at over $1,200 each, AutoZone shares have risen some 11% over the last 12 months.
Royal Dutch Shell plc (Tii:RDS-A)
If your goal is to have your car’s fluids checked and changed, your next stop may well be one of the 2,000 Jiffy Lube locations across North America. This 50-year-old chain of oil change specialty shops is a division of Royal Dutch Shell’s Pennzoil subsidiary and serves 20 million customers each year. As one would imagine, Royal Dutch Shell, a British–Dutch multinational oil and gas company, is steeped in many automotive industry sectors. In addition to Jiffy Lube and the approximate 25,000 Shell-branded gas stations in the U.S., Royal Dutch Shell also offers a line of engine oils and lubricants under the Pennzoil and Quaker State brands. The company’s Class A shares have gained some 14% for the year.
Goodyear Tire & Rubber Company (Tii:GT)
In parts of the country with severe winter weather, snow tires are a must. Motorists in these areas will no doubt eventually find themselves in the market for new tires. As not only a manufacturer, marketer, and distributor of tires, Goodyear also operates approximately 1,100 tire and auto service center outlets. If it has wheels, odds are Goodyear has a tire for it. The company manufactures products in 47 facilities in 21 countries for virtually every kind of motor vehicle, including aircraft. While Goodyear’s third quarter 2020 sales were $3.5 billion, down 9% from a year ago on COVID-19-related disruptions, the company reported that volume improved throughout the third quarter. Consumer replacement volume set a new record in China, increasing 19% over the prior year.
Advance Auto Parts, Inc. (Tii:AAP)
Checking your battery’s charge and replacing an old one if need be is an essential part of the winterizing process. With more than 4,811 stores in the United States, Canada, Puerto Rico and the U.S. Virgin Islands as of October 3, 2020, Advance is a leading automotive aftermarket parts provider that serves both professional installers and do-it-yourself customers. Advance Auto is also the company behind the well-known DieHard brand of batteries, acquiring the business in 2019 for $200 million. These batteries are now sold exclusively at Advance, Carquest and Sears, along with all of the other tools, engine fluids and parts needed to get your car in gear for the winter season. All told, business is robust for Advance Auto, which reported that comparable sales for its third quarter ended October 3, 2020, grew 10.2% – the strongest in 15 years.
Icahn Enterprises L.P. (Tii:IEP)
If there was one organization that could meet any auto aftermarket consumer need, it’s Icahn Enterprises. Through its array of subsidiaries, this conglomerate has virtually every automotive aftermarket part or service covered. Its brands include Pep Boys, a major automotive aftermarket retail and service chain with more than 900 locations; Auto Plus, a commercial distributor of automotive aftermarket parts; AAMCO, which offers transmission service, brakes, maintenance and more. Other Icahn brands include Precision Tune Auto Care, Cottman Transmission and Total Auto care, Just Brakes, and Consumer Auto Parts. While shares of Icahn Enterprises are down roughly 15% for the last 12 months, they have bounced back slightly for 2021, up 8% for 2021.
With roughly 273 million vehicles on American roads and a questionable economy that is likely to result in consumers continuing to hold onto their weathered cars just a bit longer, buying shares of automotive aftermarket products and service providers could be a great way to own the brands millions of motorists are using.