Episode summary
Jack Joins the High Miles Club. Is AutoZone a Buy? | Barron's Streetwise
Barron's Streetwise
· · 22 min · Hosts: Jack, Andrew Bary
Summary
AutoZone and other auto-parts retailers are benefiting from a U.S. fleet that is getting older and more expensive to replace. The host argues that high new-car prices, higher insurance costs, and the average age of vehicles on U.S. roads hitting 13 years are keeping drivers in their current cars longer, which supports demand for parts and repairs. He notes that AutoZone’s sales have climbed sharply since 2020, but the stock has lagged recently.
An analyst says the recent pullback reflects expectations and a slowing tailwind from inflation rather than a broken business. He argues that pricing power still helps the retailer because customers usually buy parts they need without shopping around, but the inflation boost should fade next year. He also says Amazon is not a major threat because most purchases still require store-associate interaction, and the companies have already proved resilient since Amazon entered the category.
The episode then shifts to healthcare, where a portfolio manager highlights a group of stocks she sees as attractive while the sector is down and cheaper than the market. She points to Eli Lilly, Intuitive Surgical, and Medline as businesses with durable growth, innovation, and sticky customer relationships.
Key takeaways
- The host says the aging U.S. car fleet and high new-car prices are keeping AutoZone and peers in a strong demand environment.
- The analyst says AutoZone’s stock has fallen partly because inflation-driven sales boosts are expected to slow next year.
- He argues Amazon has not meaningfully disrupted auto parts because customers still rely on store associates and service.
- The portfolio manager says Eli Lilly still has room to grow beyond GLP-1 drugs because of its pipeline and cash flow.
- She says Intuitive Surgical has a near-monopoly-like position because hospitals and surgeons are locked into the Da Vinci ecosystem.
Notable quotes
“the average age of cars on US roads has hit 13 years”
“Most of the uh products that are bought both from DIY and and certainly the commercial business uh do require some level of uh interaction with the store associate”
“the percent of sales that occur that way for the big auto parts retailers is like 1% 2%”
“It is a surgical robot. Think of it more as like an electronic tower that sits in the operating rooms”
How the episode opens
Most of the uh products that are bought both from DIY and and certainly the commercial business uh do require some level of uh interaction with the store associate. Even guys who know what they're doing with the car still like to go in and get a little bit of advice from the person behind the desk. Hello and welcome to the Baron Street Wise podcast.
I'm Jack How and the voice you just heard, that's Michael Baker. He's an analyst at DAD Davidson covering, among other things, auto parts retailers. Parts are in high demand because prices on new cars are nuts, which means old cars are staying on the road for longer.
We're going to talk about that. And later, we'll hear from a money manager about healthcare innovation and some of her favorite stocks. Let's get into it.
Listening in is our audio producer, Emily Sumlin. Hi, Emily. Welcome.
Hi, Jack. Happy to be here. — I want to make a good first impression vocally. How about I go through some of my warm-ups? EBA barons, bottom fishers of biotech. Do me f sell hold by strong by thoughts. — I'm loving what you're putting down.
Now we're rolling and I want to talk about cars. I've got cars and car prices on my mind. Emily, you said you're not much of a driver. You do drive, but you're a city person. You said you go home once in a great while to Atlanta and the the driving comes right back to you except for maybe maybe one detail.
I will say my dad always leaves the emergency brake on and I'm always like what's happening here and then I remember. — Right. Yeah. This thing isn't moving like it used to. — When I smell the fumes then I'm like uhoh.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- autozone stock
- healthcare stock picks
- portfolio picks
- mileage club
Companies and tickers mentioned
- AZO
- AutoZone
Watch the episode
Watch “Jack Joins the High Miles Club. Is AutoZone a Buy? | Barron's Streetwise” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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