Advance Auto Parts, Inc. (AAP): A Bull Case Theory
We came across a bullish thesis on Advance Auto Parts, Inc. (AAP) on Deep Value Capital’s Substack. In this article, we will summarize the bulls’ thesis on AAP. Advance Auto Parts, Inc. (AAP)'s share was trading at $51.68 as of 4th June. AAP’s trailing and forward P/E were 174.7 and 36.50 respectively according to Yahoo Finance.
An engineer at a workbench surrounded by automotive parts, tools, and microchips.
Advance Auto Parts (AAP), one of North America's largest aftermarket auto parts retailers, is undergoing a dramatic turnaround under the leadership of new CEO Shane O’Kelly, who took the helm in September 2023.
The company operates 4,285 stores and supplies 881 Carquest locations, primarily across the Eastern U.S., as well as in Canada, Puerto Rico, and other territories. AAP serves both professional installers and DIY customers, with an even revenue split between the two.
However, the company has increasingly leaned into the higher-margin professional segment, which is expected to improve profitability over time. Despite a challenging past, O’Kelly’s arrival has sparked renewed optimism. His early actions have de-risked the business, set a clear path for margin expansion, and positioned AAP to return to growth. The turnaround is not just about stabilization but about building long-term operational and financial momentum.
With a broad product portfolio including parts, tools, fluids, and accessories, AAP remains deeply entrenched in the aftermarket ecosystem. The strategic shift under O’Kelly has already started to gain traction, and if execution continues on its current track, there is a compelling case for meaningful upside.
The thesis suggests a 176% share price appreciation—or a 48.4% compound annual growth rate—by 2027. This potential return is anchored in both operational improvements and a valuation rerating as the market recognizes the turnaround’s durability. With risk now better managed and growth initiatives underway, AAP presents an attractive opportunity for investors betting on a high-quality transformation story with substantial upside.
We previously covered another bullish thesis on Advance Auto Parts (AAP) by Stock Analysis Compilation, which emphasized the company’s discounted valuation and leadership overhaul as key drivers of a long-term turnaround. Which is reflected by a 23% appreciation in stock price since then. Deep Value Capital shares this optimism but focuses more on the company’s shift toward higher-margin professional customers and quantifies the upside, projecting a 176% return by 2027 if execution stays on track.
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