For Immediate Release

Chicago, IL – May 15, 2025 – Today, Zacks Investment Ideas feature highlights Advance Auto Parts AAP, Ford F, AutoZone AZO and O’Reilly Automotive ORLY.

2 Auto Stocks to Consider for a Rebound

As one of the most vital sectors of the global economy, investors are often looking for long-term opportunities in the automotive market. Two auto stocks that are presenting this opportunity and may be in store for a sharp rebound are Advance Auto Parts and Ford.

While both companies have faced headwinds in recent years, this has also presented a chance for investors to add meaningful positions in these popular auto stocks at a more reasonable valuation.

Advance Auto Parts Is Reentering a Growth Phase

As a leading automotive aftermarket parts provider in North America, Advance Auto Parts announced in March that it had completed the store closure phase of its multi-year transformation and is now entering a growth phase.

Optimizing its retail footprint, Advance Auto Parts' transformation plan is aimed at repositioning the company for long-term success by operating more than 75% of its stores in markets where it has the No.1 or No.2 position based on store density, strengthening its presence in strategic communities.

On a national scale, this should help Advance Auto Parts to better compete with competitors like AutoZone and O’Reilly Automotive. As a formidable disruptor to these automotive parts giants, what may be most intriguing to investors is that at $32 a share, AAP trades at a “fraction” of what AutoZone and O’Reilly trade at in terms of stock price. Most importantly, Advance Auto Parts is expected to post a sharp rebound on its bottom line in the coming years.

Ford’s Outlook May Be Better than Expected

With the U.S. starting to reach trade deals with many of its global trading partners, including China, import tariffs on automakers are expected to be lower than initially feared. Ford was at the center of this conversation and had previously estimated a $1.5 billion tariff impact this year, compared to many analysts' estimates of more than $2 billion.

Keeping in mind this was before this week’s announcement that the U.S. and China will lower their reciprocal tariffs, Ford has taken steps to offset 35% of the impact by adjusting supply chains and halting exports to China, which may not be as necessary.

Plus, Ford is still expected to bring in more than $150 billion in annual sales for the foreseeable future. This makes it very advantageous to hold onto the historic automaker's stock at $10 a share, as Ford has shown a commitment to lowering its operating costs and has reacted promptly to a tougher macroeconomic environment.

Story Continues

AAP & F Check the Box as Value Stocks

Ford has often checked the box as a value stock, and Advance Auto Parts is starting to do so as well. AAP currently trades at a 20.9X forward earnings multiple, a slight discount to the benchmark S&P 500’s average, with AutoZone and O’Reilly at 24.2X and 30.2X, respectively. Meanwhile, Ford trades at 9X forward earnings, which is slightly beneath its Zacks Automotive-Domestic Industry average of 10.8X.

Furthermore, Advance Auto Parts and Ford stock trade well under the optimum level of less than 2X sales and at intriguing discounts in terms of their Price to Book (P/B) value as well.

Enticing Dividends

The cherry on top in regard to retaining Advance Auto Parts and Ford stock in the portfolio is that they are offering very generous dividends at their current levels. Advance Auto Parts' 3.01% annual dividend certainly stands out as AutoZone, O’Reilly, and many of its automotive parts peers don’t offer a payout.

Ford's annual dividend is currently at an eye-catching 5.66%, and should be able to maintain this lofty yield, especially if trade talks progress. More intriguing, Ford has an annualized dividend growth rate of 12.48% over the last five years and a 40% payout ratio, which also suggests there is room to sustain or even increase its dividend in the future.

Bottom Line

Trading more than 50% and 25% off their 52-week highs, Advance Auto Parts and Ford stock may be in store for a sharp rebound at some point. Reassuringly, their short-term outlook should continue to improve with attractive dividends and valuations that are also hard to overlook at the moment.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Ford Motor Company (F):Free Stock Analysis Report

O'Reilly Automotive, Inc. (ORLY):Free Stock Analysis Report

Advance Auto Parts, Inc. (AAP):Free Stock Analysis Report

AutoZone, Inc. (AZO):Free Stock Analysis Report

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