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General Motors

(GM) - Get Report



(F) - Get Report

are smarting after a 37% decline in U.S.

auto sales

for the first five months of this year. Bankruptcy complications, dealer shutdowns and idle factories are adding to their pain.

While the big


are suffering, companies that sell replacement parts and accessories are capitalizing on the drawdown in

consumer spending

. Roanoke, Virginia-based

Advance Auto Parts

(AAP) - Get Report

is one of them.

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Advance Auto Parts could post strong gains for the rest of the year as worried consumers postpone car purchases. Layoff fears will persuade people to keep their cars longer and do more repairs themselves to save money. Those still buying are more likely to pick used vehicles, which often require replacement parts within the first six months.

The company is already benefiting from the shift. Its first-quarter revenue rose 10% from a year earlier as net income climbed 14% to $93.4 million, or 98 cents a share. Sales at stores open at least a year increased 8.2%. Revenue from the company's international business soared 26%.

Despite the boom, the company is trying to streamline its business. It's divesting unprofitable stores, which will cut 15 to 22 cents from per-share earnings this year. It has more than doubled the cash on its balance sheet to $51 million from a year earlier. Debt has been slashed 45% to $320 million. The debt-to-equity ratio improved to 0.32, but a quick ratio of .09 suggests poor liquidity.

Analysts expect the company's second-quarter earnings to rise 5% to 83 cents. Advance Auto Parts is trading at a discount to other automotive retailers based on earnings, book value and cash flow. With a price-to-earnings ratio of about 16, it's 36% cheaper than its average peer. While the stock offers a weak dividend yield of 0.57%, its price has jumped 29% this year and has room to rise further.

We rate Advance Auto Parts "buy" with a grade of B-plus.

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.