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Letter to the Editor

This article originally appeared in the August 2009 Issue of INSIGHT

Car - Plunk

As I put pen to paper this morning, I am feeling more optimistic about the U.S. Stock Market than I have for months. Clearly, we are not out of the woods yet, but newly released unemployment figures are slightly shrinking, the housing markets are rebounding a little in several regions, and our own Collision Repair Industry stocks are showing improved numbers this month.

Our national car dealerships are posting huge gains over their dismal New Year 2009 per share stock prices. Sonic Automotive, at just over $10 per share, is up a lovely 148 percent YTD. Penske Auto-motive is up nearly 107 percent YTD, posting a per share price of $17.63. CarMax and AutoNation are rebounding nicley at the Dow, too, with per share prices up over 83 percent and nearly 70 percent respectively.

The government’s new Cash for Clunkers Program has probably improved LKQ’s place on Wall Street this month. The aftermarket and salvage parts dealer, at $16.25 per share, is showing an over 30 percent improvement on its January 1 price per share.

Dealerships across the U.S. are actually crowded with customers this month - and it seems that many of them are actually trading in their big fuel guzzlers for compact cars with more efficient gas mile-age. Will this car sales program plunk new life into the economy? Maybe a little bit, but will it impact collision repairers negatively? We will see.

All told, only three of the Collision Repair Industry supplier stocks that we track were off their beginning of the year stock prices - Genuine Parts, Sherwin-Williams, and Snap On Tools. Overall, our supplier stocks were collectively up over 15 percent YTD this month.

Our industry-related insurer stocks continue to languish at the Dow. Allstate Insurance, with a per share stock price of just under $25 this month, is about 25 percent down YTD.

I know this column is more upbeat than it has been for quite some time, but I am not ready to put on my rose-colored glasses and breath a long sigh of relief just yet. I prefer to watch for a slow but steady economic recovery. The grim situation we have been facing since the last quarter of 2008 was in the works for several years. It will most probably take several more to get where my blood pressure would like to see us end up.

-Charles Baker-

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