Your Source for Up-To-Date News and Research on the Collision Repair Industry

click here to subscribe to the FREE INSIGHT Editor's Desk News Alert Email

SUBSCRIBERS-ONLY
Today's News
INSIGHT This Month
INSIGHT Archives
Survey Center
Letter to the Editor

Business Tools
Subscription Information
CSI Reporting
Financial Analysis
IRS Audit Guide

Management/
Technical Info
Market Watch Rates
INSIGHT Inside this month's issue...

Feedback
Letter to the Editor

This article originally appeared in the June 2008 Issue of INSIGHT

What Does It All Mean?

I am scratching my head this month in confusion. Will I never understand the workings of the U.S. Stock Market? Here is the big picture this month on Wall Street:

The U.S. unemployment rate surged to 5.5 percent in May, its highest in more than 3-1/2 years, as the barely growing economy lost jobs for the fifth straight month. The jump in the monthly jobless rate was the biggest in 22 years. Combined with a huge surge in oil prices and a flare-up in Mideast tensions, fears grew that the U.S. economy was at increasing risk of sliding into recession. Consequently, stock prices took their biggest tumble since February 2007. The Dow plummeted just under 395 points on June 6, marking its worst day in 15 months.

In happy contrast to this gloomy backdrop, our industry-related and insurer stock indices, as well as the Dow Parts & Equpment Index, each had positive showings this month, posting figures over four percent higher than in January. What does this all mean? I have no idea.

Our auto dealer stocks all did surprisingly well on Wall Street this month, despite every indication that car sales are decidedly slow. The Penske Automotive Group’s per share stock price thundered upwards over 20 percent YTD. CarMax’s stock price rose just a hair under seven percent YTD, and Sonic Automotive was barely up, by about two percent, but still up. AutoNation’s per share stock price of just under $17 is nine percent up from its New Year’s price of $15.57 per share, despite significantly lower first quarter earnings.

Billionaire investor and Sears Holdings Corp. Chairman Edward Lampert has reported raising his stake in AutoNation to 39.9 percent, about 71.2 million shares, in a filing with the Securities and Exchange Commission, although AutoNation’s first quarter earnings fell 37 percent, hurt by poor vehicle sales in California, Florida and other states hit hardest by the housing market slump.

Auto auction operator Copart, despite reporting a 20 percent rise in profit for the company’s third quarter, posted a per share stock price this month 32 cents below its January price.

Aftermarket and salvage parts company LKQ reported a mind-blowing 95 percent rise in net income for the company’s first quarter. Investors were apparently mildly gladdened. LKQ’s per share stock price rose just a little over one dollar YTD.

Snap-on Tools saw a surprising rise in its per share stock price in May. At just over $61 per share, the company’s stock price is up nearly 27 percent YTD.

Our insurer stocks did better than they did all year this month. Allstate and Progres-sive stock prices are almost back up to their beginning of the year postings, and Safeco, up over 20 percent YTD, apparently has stockholders happy about its acquisition by Liberty Mutual.

Who knows what all this means? Not I! I think I’ll go for a ride and clear my head.

-Charles Baker-

Feedback

Have a comment about this article? Send Email to Charles Baker, INSIGHT's Publisher

SUBSCRIBERS-ONLY Today's News INSIGHT This Month INSIGHT Archives Survey Center Letter to the Editor

Business Tools Subscription Information CSI Reporting Financial Analysis IRS Audit Guide