Looking for recession-proof stocks? Look no further than your own car. Even if the economy tanks and oil prices reach apocalyptic proportions, people will still need their cars. Even if they're driving less, they're still driving.
That's good news for companies like AutoZone (AZO), Advance Auto Parts (AAP), and Pep Boys (PBY).
You'll still need new batteries, new windshield wipers and an oil change from time to time. And despite the malaise, people are buying what they need to maintain their cars.
AutoZone says net sales reached $1.7 billion for its second quarter ending Feb. 12, 2011, an increase of 10.3 percent from the second quarter of fiscal 2010. Domestic same-store sales — sales for stores open at least one year — increased 7.1 percent for the quarter.
Net income for the quarter increased by 20 percent over the same period last year to $148.1 million, while diluted earnings increased 35.8 percent to $3.34 per share.
“This marks the ninth consecutive quarter of 20 percent-plus growth in earnings per share and our 18th consecutive quarter of double-digit growth," says Bill Rhodes, chairman, president and chief executive officer of AutoZone.
Pep Boys is earning more as well. The company reports that sales for the fourth quarter of fiscal 2010, the latest figures available, increased by 5.4 percent to $477.4 million compared to the same period of fiscal 2009. Comparable-store sales increased 4.3 percent.
Profits more than tripled to $8.4 million from the $2.3 million recorded in the same period last year.
Over at Advanced Auto Parts, total sales for the fourth quarter of 2010 increased 11.1 percent to $1.27 billion, compared with total sales of $1.14 billion during the fourth quarter of fiscal 2009.
"The sales increase reflects the net addition of 143 new stores during the past 12 months and a comparable-store sales gain of 8.9 percent compared to a 2.4 percent comparable-store sales gain during the fourth quarter of fiscal 2009," the company says in an earnings release.
Nevertheless, watch out for fuel prices, as they can eat into business now that they are getting even higher.
Gasoline prices have risen so high that consumers may forgo driving, experts say.
The summer driving season, when gasoline prices are at their highest, is still several weeks away, and already national per-gallon averages have hit $3.83, not far from the record high $4.11 reached back in 2008, according to AAA.
"People still have to drive their kids to school, they have to go to work but we're seeing cutbacks primarily in shopping trips and as people decide not to take that weekend trip," John Gamel, director of economic analysis for MasterCard Advisors SpendingPulse, which uses purchase data to determine national demand, told Reuters.
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