AutoZone

As I write today, the average age of a car on the road here in the U.S. is older than it's ever been before. That's providing some big opportunities at auto parts retailer AutoZone (AZO). As drivers seek to extend the lives of older vehicles, AZO's parts business should continue to enjoy big organic growth. AutoZone's network spans around 4,700 stores here in the U.S. and another 321 in Mexico, making it the largest aftermarket car part seller in North America.

AutoZone has size advantages over its peers. That means that it's able to negotiate better pricing deals with its suppliers, and it means that it's able to generate bigger margins on its private-label parts business such as Valucraft and Duralast. The firm's business isn't relegated to do-it-yourselfers either -- AutoZone also boasts more than 3,000 commercial locations within its retail stores, providing parts for repair shops and service stations. While margins on the commercial side of the business don't match the profitability that AZO enjoys on the retail side, volumes help make up for the shortfall.

Mexico is a big growth driver for AutoZone, particularly because the trends of lengthening cars' useful lives are magnified down there due to a much older national car fleet. Expansion into other Latin American countries could provide much higher growth rates than the firm's current earnings multiple implies.

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-- Written by Jonas Elmerraji in Baltimore.

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At the time of publication, author had no positions in stocks mentioned. Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation. Follow Jonas on Twitter @JonasElmerraji

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