Betting on slow and steady with Advance Auto Parts stock
Advance Auto Parts, Inc. (NYSE:AAP) stock has gone by way of the broader market, shedding 14.6% this year so far. However, the stock didn't see the same dramatic breakdown as some of its sector peers. And with support emerging at the 320-day moving average, AAP has managed to maintain a year-over-year lead of 16%. A short-term bounce could be on its way, too, as the stock sports a 14-day Relative Strength Index (RSI) of 36, which sits just on the cusp of "oversold" territory.
Short sellers have been targeting AAP, with short interest rising 16.6% in the last reporting period. Should some of these investors begin to change their tune, it could put some wind at the stock's back, as short interest now makes up 5.1% of the stock's available float, and would take near four days to cover, at its average daily pace of trading.
A shift in the options pits could also help AAP back up the charts. Of the 14 in coverage, six still say "hold."
From a fundamental point of view, Advance Auto Parts stock also offers a fair valuation, with AAP trading at a forward price-earnings ratio of 16.00 and a price-sales ratio of 1.21.
Furthermore, the car parts company has grown its annual revenues 8.8% since fiscal 2020 and 14.8% since fiscal 2018. AAP has also increased its annual net income 25% since fiscal 2020 and 45.4% since fiscal 2018. On top of that, Advance Auto Parts is estimated to grow its earnings by 13.8% and its revenues by 3.6% for fiscal 2022.
Overall, the biggest concern surrounding Advance Auto Parts stock’s fundamentals can be found on its balance sheet, which holds $601.43 million in cash and $3.84 billion in total debt. Still, AAP presents a decent option for dividend investors, due to the consistency and security the company’s business provides. Advance Auto Parts offers a solid dividend yield of 2.98% with a forward dividend of $6.00.