What happened
Shares of CarParts.com (NASDAQ: PRTS) were moving higher last month after the online auto parts seller announced a new hire and got a bullish analyst note. Additionally, the stock seemed to benefit from its positioning in a recession-proof industry and its beaten-down share price as it bucked the broader trend in the market.
According to data from S&P Global Market Intelligence, the stock gained 16% last month. As you can see from the chart below, shares soared from Dec. 7 before giving up some of those gains in the second half of December.
So what
On Dec. 5, the company said it had hired Michael Huffaker, a former Amazon executive, to be its next chief operating officer (COO). Huffaker was most recently vice president of Amazon Fresh Grocery, and the company says he has a history of step-change performance at the businesses he's run. He's particularly interested in the business-to-business sector where he believes the company has an opportunity "double down" on its service.
That role was previously occupied by CEO David Meniane, who held both the CEO and COO positions after being promoted to CEO last spring. Though the stock didn't rise immediately on that news, it did gain later in the week, jumping 18% over a two-day span.
Additionally, on Dec. 16, Roth Capital gave the stock a tip of the hat as analyst Darren Aftahi called it a "top pick" in the firm's coverage universe, saying the company's recent cost management optimization should lead to continued margin expansion as it grows revenue by double digits. He added that the risk/reward was favorable and said the company is a low-cost supplier in auto parts.
Aftahi reaffirmed his buy rating and raised his price target from $7.50 to $9, sending the stock up 6% that day.
Shares gave back some of those gains over the rest of the month as fears of a recession captured market sentiment after the Federal Reserve promised more rate hikes in 2023.
Now what
In addition to the news items above, CarParts.com also seems poised to benefit from its positioning in aftermarket auto parts, an industry that has historically outperformed in recessions. After all, when times are tough, Americans tend to delay buying new cars and instead look to repair their current vehicles, meaning increased auto parts demand.
As a low-cost provider that private-labels most of its merchandise and caters to the DIY crowd, CarParts.com should also have an edge over brick-and-mortar auto parts stocks with customers who are looking to save money.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon.com and CarParts.com. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.
