Insider Activity Report: Advance Auto Parts (AAP)

Eugene Lee, a director at Advance Auto Parts (AAP), recently added 8,670 shares. The buy increased his stake by 11 percent, and came to a total cost of $499,818.

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  • This marks the first insider buy since June, when another director bought 388 shares at a cost just under $25,000. There have been five other insider buys in the past two years, all from company directors. There have been no insider sales in that timeframe.

    Overall, company insiders own 1.1 percent of shares.

    The auto parts supply store has dropped 65 percent over the past year. Earnings have slid by 40 percent, even as revenues have risen by nearly 1 percent.

    Those changes have moved shares to less than 11 times forward earnings, and Advance Auto Parts now trades at 0.3 times its price to sales.

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  • Action to take: Investors may like shares as a contrarian bet here.

    Besides the big drop in shares, a slowdown in auto sales could mean consumer hold onto their cars longer and require more auto supplies to keep their existing cars lasting longer. At present prices, Advance Auto Parts yields 1.7 percent.

    For traders, shares look oversold in the short-term and look ready to move higher. The December $65 calls, last going for about $3.40, could see mid-double-digit gains in the months ahead on a rebound in the coming months.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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