LKQ Corp (LKQ) is an amazing company. LKQ takes junk cars, strips the good parts, refurbishes them, packages and sells these parts to auto parts stores. I wrote about the stock in April when it was $22 and tried to hold out for $20. But LKQ took off and hasn’t looked back. Now the shares are $32 and I am waiting for another opportunity.
LKQ is great because it has grown profits at least 20% a year for the past decade. The company does a lot of expanding via purchasing salvage companies, and is starting to make a big impact in Europe. When I visited the stock in April it had a P/E of 20 but profit growth was only 5% at the time so I didn’t buy in. Let’s take a look at LKQ now and see if this is a good time to get in.
One Year Chart
Wow, profit growth is really humming right now. I doubt this stock will pull back anytime soon. At least now the P/E is a reasonable 24. Last quarter it was 29, but I was looking at 2013 estimates then, this 24 P/E is calculated using 2014 figures.
LKQ has met estimates the last two quarters. 2013 profit estimates are only a penny higher than they were four quarters ago. Both these facte make me think this stock isn’t timely. Still it rises. Come back, please?
Fair Value
I feel LKQ is worth 25 times earnings. That means next year I think it will sell for $33. The stock is $32 now. 2015 upside is great, but that’s 14 months away.
Sharek’s Take
LKQ is a must-own stock for me but I need to get in at a good price. I feel the stock is worth $33 next year and since it’s selling for $32 now, its not on sale. I’ll keep LKQ at the top of my radar, and hope LKQ comes back.
View the Earnings Table here. View the Profit History here.View the Ten Year Chart here.
