LKQ Is in the Fast Lane to Profits

NEW YORK (TheStreet) -- The most fun part of managing money is getting to learn about the different and crazy ways that people earn a living, often a very good living.

If you met the person who started a company called LKQ (LKQ) and asked him what his company did, he would tell you he was in the used car-parts business. Does that strike you as a person on the road to riches? Probably not.

Look again: LKQ is a $10 billion large-cap company that just so happens to be America's largest supplier of recycled, aftermarket and reconditioned car and truck parts as well as heavy-duty truck parts. It was founded in 1998 and now has more than 500 facilities in Canada, Central America, Europe, Mexico and the U.S.

That's not exactly Fred Sanford running a junk yard.

Data from Best Stocks Now App

LKQ is also a stock I've mentioned before. In May the company announced its acquisition of Sator Beheer, the European equivalent of LKQ. Upon announcement, LKQ stock broke out. At the beginning of this month LKQ announced yet another acquisition -- Keystone Automotive. Again the stock broke out and I finally got back in. Why? Because LKQ qualifies as a Best Stock Now on the following three criteria:

Performance

Number one is performance. LKQ is one of the top-performing stocks in the entire market. I bet you're scratching your head right now over this stock you've never heard of.

Data from Best Stocks Now App

Over the last 10 years, LKQ has delivered 32% per year along with fenders for 1969 Datsuns! Over the last five years LKQ has delivered 47% per year. Over the last three years LKQ has delivered 42% to investors and over the last 12 months LKQ is up 55%.

When I stack this little collision repair company against all of the other companies that it competes with, LKQ gets a performance grade of A. Don't forget, this stock goes head to head with Facebook (FB), Netflix (NFLX), Twitter (TWTR) and all of those other high-flying tech stocks invented in college dorm rooms.

Valuation

What about valuation? The valuation of LKQ is 25 times forward earnings but its expected to continue to grow by 25% per year which its already been doing over the past five years. That gives it a PEG ratio under 1 (0.98). The stock has 90% upside potential.

Data from Best Stocks Now App

So from a momentum and performance point of view, I give LKQ an A. The Investors Business Daily gives it a relative strength rating of 86 -- not bad. But relative strength leaves out valuation, and LKQ does pass the valuation test.

Stock Chart

Lastly we have to check that all-important stock chart.

LKQ just hit a new high -- it's breaking out right now after about a three-month consolidation. LKQ passes my performance, valuation and stock chart test.

Data from Best Stocks Now App

Out of the nearly 3,800 stocks that I follow in my Best Stocks Now app, LKQ comes in at #81 and it is a stock that I own at Gunderson Capital Management.

At the time of publication the author had a position in LKQ.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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