3 Stocks To Watch As The Prices Of Used Cars Skyrocket

brown and black vehicle steering wheel

With the focus on earnings reports, many investors may be missing out on the burgeoning bubble in used car stocks. Due to low new car inventories, used cars are flying off the lot. That is great news for stocks such as Advance Auto Parts (AAP), LKQ Corporation (LKQ), and AutoZone (AZO).

While most investors and traders are focused on Q1 earnings, I’ve found a little corner of the market that should see solid gains over the next couple of months. As most industries are recovering this year, new car sales are down considerably in 2021.

This is due to lower production in 2020 and a current worldwide chip shortage. But this has been a blessing for used car sales and companies that serve this market. As used cars take center stage, there will be an increasing need for auto parts.

This provides us a unique opportunity to take advantage of auto parts stocks that should see their shares rise in the months ahead. That’s why I’m recommending Advance Auto Parts Inc (AAP - Get Rating), LKQ Corporation (LKQ - Get Rating), and AutoZone, Inc. (AZO - Get Rating). But first, let’s recap the week before I dig deeper into these companies.

Market Commentary

Stocks finished slightly down on Monday as investors awaited corporate earnings reports and economic releases. The market was mixed the following day as Wall Street digested an uptick in consumer price inflation and adverse vaccine developments. Headline CPI rose 0.6% last, with a rise in gasoline prices accounting for half the increase.

Investors were also concerned with the FDA halting Johnson & Johnson’s (JNJ) vaccine. The market was mixed again on Wednesday as JPMorgan Chase (JPM) and other U.S. banks reported strong profits. Early gains were erased by the end of the day. Bitcoin hit a new record (above $64,000) as crypto platform Coinbase (COIN) officially started trading.

Stocks finished much higher on Thursday after an influx of strong corporate earnings reports and upbeat economic data. So far, first-quarter earnings reports are easily beating estimates. Retail sales for March beat estimates coming in at 9.8% over February. Plus, initial jobless claims over the past week were 576,000, much less than the expected 710,000.

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