5 Best Auto-Parts Stocks to Buy for 2021

4. Advance Auto Parts, Inc. (NYSE: AAP)

Activist investor Jeffrey Smith’s Starboard Value LP owns 1,596,921 shares of Advance Auto Parts, Inc. (NYSE: AAP), worth $245.13 million. Overall, 42 hedge funds in our database have stakes in the North Carolina-based company. Advance Auto Parts operates nearly 5,000 stores in North America. Earlier in December, Bank of America gave bullish comments with a Buy rating for the stock. Morgan Stanley, which has a $190 price target and an Overweight rating for Advance Auto Parts, said in November that Advance Auto’s is performing well, especially in the DIY market. The firm increased its targets for the company in the light of its excellent performance. Morgan Stanley sees 40+ bps of EBIT margin upside in 2021/2022 for Advance Auto.

In its Q1 2020 Investor Letter, Diamond Hill Capital said the following about Advance Auto Parts:

“Advance Auto Parts, Inc. is a leader in the automotive aftermarket parts retail market where the top companies produce some of the best margins in all of retail. Following a complex acquisition in 2014, Advance underperformed and lost market share under the leadership of a previous management team. The company is executing well on a plan to gain market share and materially improve margins.”

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