Auto-parts retailers face an atypical threat: If risk aversion is near a peak now, as slumping Treasury yields and a tightly correlated market seem to indicate, then any dissipation of this economic anxiety could siphon money from the groupLinks of London S Charm And money managers taking refuge in these defensive, countercyclical stocks are watching for cues to begin shifting toward more cyclical bets. Shares may not seem egregiously expensive, but price/earnings ratios have expanded generously this year even as they shrank elsewhere in the market. Advance Auto Parts (AAP), for example, trades at 15 times projected 2010 profitsLinks of London R Charm while multiples are pushing 20 times for CarMax (KMX), 18 times for O'Reilly and 16 times for AutoNation (AN). AutoZone (AZO), meanwhile, has doubled since it was a bullish pick here at the height of the 2008 credit crisis, as has nearly every stock in the sector. But with the herd bracing for subpar economic growth and a golden age for vehicular fixer-uppers, now may be the time to take some profits. Itron (ITRI), which makes smart meters for power, gas and water companies, saw second-Links of London profit jump 76% on surprisingly robust revenue across Links of London Q Charm globe. But even after last week's 10% pop, to about 65, the stock is still underwater this year and 20% off its 2010 peak. Itron benefits as utilities spend their stimulus money on smart-grid projects. But demand for technology that collects and analyzes utilities' data, and does away with manual meter readings, should continue to grow for years to come, in a future that prizes productivity and efficient allocation of power.
Commentaires