5 Safe Stocks to Buy During Recessions

1. AutoZone, Inc. (NYSE:AZO)

Number of Hedge Fund Holders: 38

AutoZone, Inc. (NYSE:AZO) is a Memphis, Tennessee-based aftermarket automotive parts retailer with more than 6,100 locations across the US, Mexico, Puerto Rico, and Brazil.

In the past decade, AutoZone, Inc. (NYSE:AZO) has been on an aggressive share buyback plan. It has reduced its total outstanding shares from 42 million to 28 million shares and still has an authorized share buyback plan of $2 billion in place. The gross profit margin of AutoZone, Inc. (NYSE:AZO) stands at 52%. The high margins provide a cushion during the inflationary period.

The company is on its way to reporting the third-highest inflationary year as the prices of motor vehicle parts rose by 9.38%. AutoZone, Inc. (NYSE:AZO) also has the option to source these auto parts from low-cost producing countries like Taiwan and Vietnam. Thus, a lower buying price and a higher selling price could further improve the company’s margins.

Although the automobile supply chain has come under pressure due to the chip shortage AutoZone, Inc. (NYSE:AZO) has not been significantly impacted by this development as it sells basic parts like brakes, mufflers, and spark plugs.

Overall, 38 hedge funds held a stake in AutoZone, Inc. (NYSE:AZO) at the end of Q1 2022.

You can also take a peek at the 10 Biotech Stocks to Buy Today According to Ken Fisher’s Fisher Asset Management and 10 Favorite Stocks of Dan Loeb’s Third Point.

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