Auto Parts Stocks: 3 To Drive, 3 To Park

Even though U.S. new-car sales rose 7.5% in August, don't expect that bump to
take the air out of the right auto parts stocks. Here's why: Before the
recession hit in 2008, the U.S. auto industry was selling an average of 16
million new vehicles a year. And while this year's forecast of 12.5 million
vehicles is a big improvement from the 10.4 million the industry sold two years
ago, it's a far cry from being back to "normal. With high unemployment,
tight credit and sinking consumer confidence, fixing up the clunker in the
driveway might just be the new "normal. Since the average car on the road
today is 11 years old, that translates into a continued growth opportunity for
auto parts stocks. With that in mind, here are three auto parts stocks to drive
and three to park: Drive AutoZone (NYSE: AZO ). AutoZone on Tuesday reported
fourth-quarter earnings growth of 12.1% to $301.5 million ($7.18 per share); net
sales jumped 8% to $2.6 billion. Same-store sales, which measure performance
against direct competitors, grew 4.5%. For the full year, sales increased 9.6%
to $8.1 billion; full-year earnings rose 15% to $849 million. One key measure of
AZO's strength: for the first time in its history, commercial sales accounted
for more than $1 billion. This will be a growth opportunity for AutoZone in the
future. At $327.75, AZO is trading more than 53% above its 52-week low of $214
last September. With a market cap of $23.62 billion, AZO has a
price/earnings-to-growth ratio of 1.14, meaning it's only slightly overvalued.
LKQ Corp. (NASDAQ: LKQX ) LKQ, which will next report earnings on Oct. 24, sells
new and recycled auto parts, providing a lower-cost option for consumers. Last
year's acquisition of Cross Canada Body Parts and Paint Circuit gave LKQ a
strong Canadian presence, as well as 300 more locations in North America. At
$25.51, LKQ is trading more than 27% above its 52-week low of $19.94 last
September. With a market cap of $3.74 billion, LKQ has a PEG ratio of 1.08,
meaning it is fairly valued. O'Reilly Automotive (NASDAQ: ORLY ) O'Reilly,
which next reports earnings on Oct. 26, boasts 3,657 stores in 39 states. ORLY
said last week it has lowered its credit facility from $750 million to $660
million in exchange for lower interest rates and a longer term through 2016.
ORLY set a new 52-week high of $72 on Monday and, at $70.42, is more than 36%
higher than its 52-week low of $51.71 last September. With a market cap of $9.57
billion, the stock has a PEG ratio of 1.19, indicating it is slightly
overvalued.