On the Performance of Auto-Parts Retailers Stocks

Posted by on

One way to profit from the growth of the automotive sector is to invest in auto parts companies. This includes auto parts markets and retailers. Auto makers are not a great investment especially for the long-term due to many issues including legacy obligations and other factors. Auto parts makers and retailers benefit benefit during good and bad times. During normal periods, consumers depend on them for regular maintenance and during recessions people tend to hold on to their existing vehicles longer which inevitably requires parts maintenance and replacement.

The biggest of the three auto-parts retailers in terms of market capitalization is O’Reilly Automotive Inc (ORLY) which has a market cap of over $56 billion based on Friday close. The next top firms are Autozone Inc (AZO) and Advance Auto Parts, Inc.(AAP). AAP is the smallest with a market cap of just under $4 billion.

O’Reily stock is the top performer so far this year with a return of over 10%. Autozone is flat. But Advance Auto Parts has plunged by nearly 58% as shown in the chart below:

Click to enlarge

Source: Google Finance

The following chart shows the 5-year returns:

Click to enlarge

Source: Google Finance

In the past 5 years also AAP has been the worst performer. Autozone beat Advance Auto with a return of 220%.

AAP had poor earnings in the first quarter and also slashed its dividend. Consequently its stock had the largest single-day decline ever in May. The company missed its second quarter earnings miss and lowered the forward guidance. With major management changes announced including the replacement of the CEO, it will be a while before AAP recovers. Given its past performance it will be a hard slog. From an investment perspective it is better to avoid AAP.

Disclosure: No positions

Why Tactical Asset Allocation is a Not a Smart Idea: Chart

Posted by on

One of the key strategies for success with investing is the simple task of diversification. I have written many times in this blog that diversification is the easiest way to reduce risk and improve returns. Diversification over various asset classes is one way to implement diversification in a portfolio. The following chart shows the importance of diversification using returns from the UK market as published by Vanguard:

Click to enlarge

Source: Vanguard UK

The Top 10 Restaurants by U.S. Revenue 2022

Posted by on

The Subway fast food chain is to be sold to Roark Capital for $9.6 billion according to a recent article in The Wall Street Journal. Subway is the eighth largest chain the US based on revenue in the US market in 2022.

The top restaurant chain in terms of US revenue is McDonald’s (MCD). While Starbucks (SBUX) at number two is not surprising, Chick-fil-A taking the third spot is indeed surprising.

All the top 10 companies listed above are established players with billions in revenue. It remains to be seen if any of the smaller startup chains such as Sweetgreen (SG) and others can join this elite group.

Source: Subway Sandwich Chain Nears Sale, WSJ

Disclosure: No positions

Homicide Rate in South America: Chart

Posted by on

In an earlier post we looked at the homicide rate in the US and Europe. In this post, let’s take a quick look at the homicide rate in South America. Globally countries in the continent are not known for low homicides. Homicides rates in South America are very high relative to the rates in Europe and the USA.

The highest rates are in Venezuela, Colombia and Brazil. The lowest homicide rate is in Chile followed by Argentina.

Click to enlarge

Source: Landgeist

Homicide Rate in USA vs. Europe

Posted by on

The homicide rate in the US is high compared to European countries. In this post, let’s take review the how they compare. Though both are part of the developed world the homicide rate vary significantly between them. It is beyond the scope of this post to discuss why they vary so much.

The following charts show age-standardized homicide rate per 100,000 people.

Homicide Rate in the USA:

Click to enlarge

Homicide Rate in Europe:

Click to enlarge

Source: Homicide Rate in Europe and Homicide in the US, Landgeist

A few observations:

  • The state with the highest homicide rate is Mississippi at 20.5 followed by Louisiana and Alabama.
  • In general, the deep southern states have high rates exceeding 10.
  • The lowest rates are in New Hampshire, Vermont and Maine.
  • Even the midwestern states have rates in excess of 9 on the average.
  • The prosperous states of California and Texas have relatively low rates.
  • The northwest states of Washington and Portland have lower rates compared to the awful deep south.
  • The highest homicide rate in Europe is in Latvia at 3.32 per 100,000. Only just a few states in the US have figures lower than this.
  • In fact, only just 7 US states have a lower homicide rate than the highest rate in Europe: New Hampshire, Vermont, Maine, Idaho, Massachusetts, Utah and Rhode Island.
  • A casual look at the above 2 charts show the massive difference. Europe is mostly yellow which is between 0.0 and 1.0.
  • None of the European countries have rates higher than 3.5. This is a shocking figure compared to the high rates in the southern states in the US.