Icy Roads Bring Profit Opportunity
Icy Roads Bring Profit Opportunity More than half of the country is already covered with a blanket of snow and winter doesn’t even officially begin until Saturday. Winter storms have been packing a wallop since early October, snarling traffic with several inches of snow and freezing rain. I did a quick tally of traffic accidents reported this month and came up with more than 1,000. That’s a small survey of news reports, so the actual number of accidents is likely quite a bit larger — and that doesn’t include the minor fender benders that go unreported. All those cars, trucks and SUVs that are crunched in accidents need to be repaired, using either originalmanufacturer parts or parts made by other companies. And that’s where we have the potential to profit. Snow, ice and slush cause an average 583,400 accidents each year, or about 39% of all weather-related crashes, according to the Federal Highway Administration. At the same time, the National Highway Traffic Safety Administration estimates that 10 million accidents go unreported each year. Assuming that 39% of those are snow and ice related, that means there is a grand total of some 4.48 million crashes annually. Moreover, the Insurance Research Council says the average property damage claim for all accidents in 2012 was about $3,000. That works out to be $1.7 billion worth of business for the auto-repair industry. Accidents Waiting to Happen And that’s just those accidents reported to the police and insurance companies. Another 3.9 million accidents go unreported that require just a new taillight, grille or fender. As a weather investor, this winter is playing right into our hands. Snow will fall on Kansas City and Milwaukee this weekend, the Northeast will have more snow before New Year’s Day, and at least 10 large snow and ice storms are poised to hit the U.S. between now and the end of February.
There are a lot of accidents waiting to happen. And there’s one company that’s set to profit from them — U.S. Auto Parts Network, Inc. Action to take: Buy U.S. Auto Parts Network, Inc. (Nasdaq: PRTS) up to $2.50. This is a tiny company, with a market cap of just $71 million. Because of the low volume, please make sure you use a limit order to buy this stock. U.S. Auto Parts was established in California in 1995 and operates in the U.S., Canada and the Philippines. Over the past 13 years, this company has grown into one of the leading online providers of automotive aftermarket parts, including body, engine and performance parts, as well as accessories. Nonetheless, the company has had a tough past few years — thanks to poor management, fat bonuses, lackluster performance and falling revenue. At one point, the company was even under the threat of being delisted from the Nasdaq because of the lack of independent board members. All of this explains why shares of PRTS have lost some 90% of their value in the last three years or so. PRTS Shares Still Look Undervalued
See larger image But then things started to change in November, when the company made two big announcements. Firstly, it elected two new board members, bringing the company's total number of directors to eight and the total number of independent directors to five. As a result, the company is now in compliance with the independent director requirements of Nasdaq’s listing standards. Secondly, it announced the sale of AutoMD, a division of the business that wasn’t generating much revenue, but was consuming a lot of resources. Maguire Asset Management, one of the biggest public shareholders, estimates that the sale of AutoMD will generate annual savings of $4 million.
On Track for Profits I expect these savings to drop straight to the bottom line. The management's ongoing initiative to sell higher-margin, private-label products should also help the company make a profit next year. The online automotive-parts industry in the U.S. is expected to grow 6%, annually, over the next five years. Despite the short-term challenges, PRTS remains a market leader with an 11.4% market share. With the increased demand for auto parts — particularly as a result of this winter’s weather conditions — and the recent management changes, I believe this stock could easily double from here. There’s a silver lining in every cloud,
Chris Orr Editor, Weather Trader
There are a lot of accidents waiting to happen. And there’s one company that’s set to profit from them — U.S. Auto Parts Network, Inc. Action to take: Buy U.S. Auto Parts Network, Inc. (Nasdaq: PRTS) up to $2.50. This is a tiny company, with a market cap of just $71 million. Because of the low volume, please make sure you use a limit order to buy this stock. U.S. Auto Parts was established in California in 1995 and operates in the U.S., Canada and the Philippines. Over the past 13 years, this company has grown into one of the leading online providers of automotive aftermarket parts, including body, engine and performance parts, as well as accessories. Nonetheless, the company has had a tough past few years — thanks to poor management, fat bonuses, lackluster performance and falling revenue. At one point, the company was even under the threat of being delisted from the Nasdaq because of the lack of independent board members. All of this explains why shares of PRTS have lost some 90% of their value in the last three years or so. PRTS Shares Still Look Undervalued
See larger image But then things started to change in November, when the company made two big announcements. Firstly, it elected two new board members, bringing the company's total number of directors to eight and the total number of independent directors to five. As a result, the company is now in compliance with the independent director requirements of Nasdaq’s listing standards. Secondly, it announced the sale of AutoMD, a division of the business that wasn’t generating much revenue, but was consuming a lot of resources. Maguire Asset Management, one of the biggest public shareholders, estimates that the sale of AutoMD will generate annual savings of $4 million.
On Track for Profits I expect these savings to drop straight to the bottom line. The management's ongoing initiative to sell higher-margin, private-label products should also help the company make a profit next year. The online automotive-parts industry in the U.S. is expected to grow 6%, annually, over the next five years. Despite the short-term challenges, PRTS remains a market leader with an 11.4% market share. With the increased demand for auto parts — particularly as a result of this winter’s weather conditions — and the recent management changes, I believe this stock could easily double from here. There’s a silver lining in every cloud,
Chris Orr Editor, Weather Trader
