01/14/2014 7:00 am EST
If could only own one stock in our Buyback stock universe, it would be this auto parts firm; the stock ranks as our top growth pick for the coming year, explains David Fried, editor of The Buyback Letter.
AutoZone (AZO), the Memphis-based firm, is the nation's leading auto parts retailer, and a leading distributor of automotive replacement parts and accessories, with more than 5,000 stores in the US, Puerto Rico, and Mexico.
Each store carries an extensive line for cars, sport utility vehicles, vans, and light trucks, including new and remanufactured hard parts, maintenance items, and accessories.
Many stores also have a commercial sales program that provides commercial credit, and delivery of parts and other products to local, regional, and national repair garages, dealers, and service stations. Since opening its first store 34 years ago, AutoZone has joined the New York Stock Exchange and earned a spot in the Fortune 500.
AutoZone might not be a glamorous business, but solid, yet boring, is fine with us, since it generates plenty of cash. But, it's what AutoZone does with that cash that makes it one of our favorite stocks of all time.
AutoZone has long been an active and committed repurchaser, so much so, that financial pundits have joked that it sometimes looks like the company is taking itself private on an installment plan!
AutoZone has used its cash to repurchase more and more shares that represent an ever-growing percentage of the remaining shares outstanding. In fact, we expect the share repurchases to continue at AZO, as it is now an ingrained part of the corporate culture.