With the new year comes a review of one position. Over the past few weeks, I will be looking to shut down some hidden gems I will benefit greatly from the old long-term trend.
Well I’m Runnin ‘ streets, tryin’ to be added to my portfolio
Between 2006 and 2010, the total car sales in the United States declined 6%, but most of which can be connected with a 30% drop in sales of new cars. The average age of a car or truck in the United States also reached a record 6.7 in 2011, up from 5.2 in 1996. It’s been a terrible time for trying to sell the car, especially a new one, but the time is right to keep one running long.
This trend explains why auto parts stores such as AutoZone (NYSE) has seen its sales slip 15% over the last decade and only managed to grow net income by increasing profit margins. Ford even improve profit margins come over shrinking cost of sales, General and administration than that of the increase in gross margin. Gross margin increased to show strong demand, but Ford has been declining for more than a decade, and despite increased dramatically since 2009, apparently on his way down again.
Don’t let the size of the catalog drive you crazy Dorman’s
Dorman products in particular has capitalized on the trend toward keeping used autos around again. Over the past five years, sales have increased by 75%, while net income has more than tripled.
Dorman sold about 122,000 variety of spare parts, about 21% of which were previously only available through original equipment manufacturer. Dorman’s a large catalog and the ability to produce lower-cost, hard-to-find items give you a strong competitive advantage, which is a factor to 35% gross margin very capable with the order, placed near the top of your peer group with.