AutoZone, Inc. (AZO): A Bull Case Theory

We came across a bullish thesis on AutoZone, Inc. (AZO) on Substack by Francesco Ferrari. In this article, we will summarize the bulls’ thesis on AZO. AutoZone, Inc. (AZO)’s share was trading at $3603.47 as of April 17^th. AZO’s trailing and forward P/E were 24.20 and 23.36 respectively according to Yahoo Finance.

A technician in a mechanic’s uniform replacing an A/C compressor, signifying the company’s automotive replacement parts business.

AutoZone (AZO) stands out as a market-beating, low-volatility stock that continues to deliver strong performance despite a beta of just 0.54. With a market cap of $61.22 billion and a remarkable 10-year compound annual growth rate (CAGR) of 18.1%, AZO exemplifies how consistent outperformance doesn’t always require high-risk exposure. The company operates in the specialty retail sector and showcases one of the most impressive long-term stock charts in the market. Financially, it posts robust metrics, including a 29.4% return on invested capital (ROIC), a 3-year revenue growth of 6.2%, and gross margins of 53.1%. Its gross profits have compounded at 6.6% over three years, while operating margins sit at a strong 20.1%. With an EBITDA-to-interest expense ratio of 8.9, AutoZone reflects disciplined capital management and financial resilience. For investors seeking alpha without elevated volatility, AZO represents a compelling case, proving that low-beta stocks can still drive exceptional returns over the long term.

AutoZone, Inc. (AZO) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 56 hedge fund portfolios held AZO at the end of the fourth quarter which was 47 in the previous quarter. While we acknowledge the risk and potential of AZO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AZO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.