LKQ Corp (LKQ) is a stock you need to know about — and own. The company buys old salvageable cars and strips them for parts. Then it checks the parts, rebuilds if need be, spruces them up like new, and sells them as rebuilt. Sounds like small-business, but LKQ is an international powerhouse and a serious stock to consider for your portfolio.
Take a look at these pictures from an LKQ annual report. We’re not talking dirty junkyard stuff. Here’s some front ends. And some refurbished parts ready to hit the shelves. The parts look like new.
LKQ the company and LKQ the stock have grown at 20% a year for almost ten years. This is a solid business.
One Year Chart
LKQ was $15 a year ago and now its $22. The stock’s clicking but profit growth is slow right now. Profits grew at 5% last quarter and 6% two quarters ago.
The ten year chart shows a better view of this stock. LKQ has been one of the decade’s biggest winners, yet continued to be under the radar of most investors.
Fair Value
LKQ is worth $21. The problem is profit growth has slowed, so the P/E could come down a bit. If that happens the stock could dip below $20. This stock is a little overvalued right now.
Sharek’s Take
LKQ is a great stock to buy-and-hold. I feel the stock can grow at up to 20% a year. The company has grown profits every year since its IPO, so it has consistency. The stock also has certainty because people continue to buy used car parts in recessions.
What’s holding me back now is profit growth is slow, and that slow growth could continue another 6-months. All-in-all this is a fine holding, and I see myself getting the stock if it falls into the high-teens.
View the Earnings Table here.View the Ten Year Chart here.
