Advance Auto Parts (AAP), mcap=$11.6bn, price $192 vs $182

– Leading N.A. automotive parts retailer through B&M stores and e-comm sites.
– In the middle innings of the 5-year integration/turnaround process of its multiple brands to have unified supply and logistics chains, common IT infrastructure and etc.
– Trades at 13xEPS – beblow peers and below historical levels.
– Expected to re-rate as fruits of the turnaround become evident.
– 77% of sales to DIY segment, higher than peers.
– Recession-resistant industry.

– Currently sits at 13x and 10x EPS for ’22 and ’25.
– Historically traded in 16-18x range.
– Peers $ORLY and $AZO are at 17-18x fwd EPS.
– $300 target using 17x multiple on $17/share 2024 EPS (vs $13.5 for ’22).

Exp. gain: +65% to $300/share by 2023.

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