Why Shares of O'Reilly Automotive, AutoZone, and LKQ Surged in April
April was a pretty good month for shares in automotive related stocks. According to data provided by S&P Global Market Intelligence, auto parts retailers O'Reilly Automotive (NASDAQ: ORLY) and AutoZone (NYSE: AZO) rose 28.3% and 20.6%, respectively, over the month, and aftermarket automotive parts company LKQ (NASDAQ: LKQ) followed suit with a 27.5% increase. What's going on and why might these stocks be worth buying?
AutoZone and O'Reilly are auto parts retailers and are often seen as recession-resistant options for investors, since their sales are largely dependent on the mileage and the average age of an automobile -- factors that don't necessarily depend in the economy.
Older cars require more replacement parts. And more miles driven implies more accidents -- a key factor in repair demand. And the sweet spot for auto repair is seen as somewhere between seven to ten years. In this range, a car is old enough to start needing replacement parts, but not too old that its owner stops maintaining it properly. LKQ, a leading provider of alternative parts to automotive repair shops, can be seen in a similar vein to the auto parts retailers.
Source Fool.com
