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Letter to the Editor

This article originally appeared in the June 2006 Issue of INSIGHT

Rays of Sunshine

Well, if it ever stops raining here on the soggy south side of Lake Erie, the warm weather will come - I hope. On this gloomy Spring morning I am determined to find a ray of sunshine for our Industry Stock Report.

Last month, I ended by saying that our collision-related insurer stocks are not shining brightly in this second quarter of 2006. This month there has been some improvement for all our insurer stocks. With another severe season of hurricane activity predicted for the next several months, the insurers are probably hoping to “tread water” and get through the second half of 2006 without losing ground.

As announced last month, Progressive performed a 4-for-1 stock split on May 16 that will be indicated here in next month’s stock chart.

For a little more sunshine, only two of our Collision Industry-related manufacturer and supplier stocks posted per share stock prices lower than their January prices. One of these, eAutoClaims, at 23 cents per share, hardly matters, and Genuine Parts is off only one percent from its January 1 price per share.

Just for comparison, a year ago, in June 2005, I wrote: “Only five of our Collision Repair Industry-related stocks and two auto insurers had per share prices on the plus side of their beginning of the year figures.”

Last year at this time, our Supplier Index was off just under 15 percent for the year. This time, it is up almost ten percent YTD. This is good news, especially with the big jumps we have seen in the price of a barrel of oil this year.

I am especially impressed with our paint manufacturer stocks. Their per share prices are all up nicely despite the rises in raw materials and shipping costs.

Aftermarket parts distributors Keystone Automotive and LKQ Corporation continue to shine. Both of these companies have achieved per share prices that are almost 30 percent above their New Year’s Day marks.

It will be interesting to see what activity will develop from Keystone’s announced plans to move executive offices to Nashville, TN. (See page 17.)

Our car dealership stocks have had a good month on Wall Street, too. AutoNation is up just a bit, but CarMax, Sonic Automotive, and the United Auto Group are all up well over ten percent from their January per share stock prices.

United Auto has announced a two-for-one stock split, scheduled for June 1.

My sunny day suggestion for car dealerships is the same I gave last June: Overcome the horrors of higher gasoline prices at the pumps with a few shiny new convertibles out front on the auto campus and lure in some customers.

-Charles Baker-

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