1 no-brainer stock you can buy right now on a dip for $100

For the 12 weeks ended May 4 (Fiscal Year 2024 Third Quarter) auto zone (now -0.09%) It reported sales and earnings per share up 3.5% and 7.5%, respectively. Shareholders were not happy with these results and immediately drove the stock down after the news broke.

As of May 24th, the stock is auto parts retail store It is a 14% discount from the highest price at the beginning of this year. This presents a profitable buying opportunity. Here’s why AutoZone is an obvious stock to buy for $100 right now. The stock is trading above $2,700 per share, so if you only have $100 to invest, you should buy some of the stock.

Has recession-proof features

The company could no longer escape the artificial intelligence boom. But in this case, boredom is beautiful. AutoZone sells auto parts and accessories, such as brake pads, engine oil and batteries, to DIYers and auto mechanics through a network of 7,236 stores, 6,364 of which are in the United States. That doesn’t sound very exciting or revolutionary, but it’s helped the stock soar 415% over the past decade.

It is worth mentioning the durable demand this business experiences. In good and bad economic times, there are few things more important to people’s daily lives than having a properly functioning vehicle. This has made AutoZone somewhat prepared for the recession.

For example, during the Great Recession, the company reported sales growth of 5% in fiscal 2009 and 8% in fiscal 2010. In difficult times, people may put off buying a new car and instead spend money maintaining their existing vehicle.

Industry trends favor this

AutoZone has historically benefited from certain tailwinds. Since 2012, the average age of U.S. vehicles has been over 12 years. Therefore, these vehicles spend more time outside of their original manufacturer’s warranty, which is an advantage that AutoZone provides.

Moreover, Americans generally drive a total of more miles each year. This trend suggests that wear and tear on vehicles overall is increasing, although consumers have been hit hard during the pandemic when their mobility has been restricted. This backdrop supports demand for AutoZone.

These long-term industry trends have helped drive consistent same-store sales and profit growth. And it’s hard to see this ending any time soon.

The aftermarket auto parts industry is still very fragmented, with no single player being dominant. As a result, there are many smaller retailers that compete with AutoZone. However, given our brand recognition, large store base and unrivaled inventory, we are confident that this business will be able to better serve our customers and consequently capture market share in the coming years.

The stock has an attractive valuation.

We have seen that this is a high quality company. The next variable that investors should consider before purchasing a stock is its current valuation. It doesn’t matter how great your business is. If the price is too high, it can be a terrible investment.

As of this writing, AutoZone stock trades for a price-to-earnings ratio of 19.6. This makes it slightly more expensive than the stock’s average over the past 10 years. However, this represents a notable discount on a wider scale. S&P 500.

Management has long adopted a capital allocation policy that actively utilizes free cash flow to repurchase shares. Over the past five years, the number of issued shares has decreased by 30%, increasing the shareholding ratio of existing investors. Considering the attractive valuation, this still seems like a smart use of capital.

There may be no better time than now to spend $100 on a reliable all-in-one like AutoZone. Plan to own stocks for at least the next five years.