Today we are going to look at Advance Auto Parts (AAP) to see if it is a good stock to buy at this time? We will look at the 7 fundamental parameters I look to see if a stock can be considered a growth stock. Then we will take a look at the technical analysis side using the setups I have created and use for my trades. I have no plans to own AMD in the next 72 hours and do not hold any positions in Advance Auto Parts (AAP).
Advance Auto Parts (AAP): Is it a Good Stock to Buy?
There are 7 fundamental markers I look for in a stock. I try to only purchase growth stocks so these are the parameters I look for to see if a stock meets the majority of the markers. I prefer to have all seven fulfilled. You can it more in depth here: https://evancarthey.com/how-to-scan-for-winning-stocks-an-insiders-view-to-my-process/
- Market Cap: > $300 million
- EPS growth past 5 years: >0%
- P/E: Over 10
- EPS growth next 5 years: >0%
- Sales growth past 5 years: Over 20%
- Debt/Equity: <0.1
- Sales growth qtr over qtr: Over 5%
Does the stock meet these 7 markers?
- Market Cap: 12.67B (YES)
- EPS growth past 5 years: 1.20% (YES)
- P/E: 31.02 YES
- EPS growth next 5 years: 17.52% (YES)
- Sales growth past 5 years: 8.10% (NO)
- Debt/Equity: 0.00 (YES)
- Sales growth qtr over qtr: 3.30% (NO)
I used Finviz.com for the fundamental analysis screener. With AAP hitting 5 of 7 of the markers it is not what I would consider a growth stuck. One item to point out is the Debt/Equity is awesome at a flat 0.00. But if you are looking at investing in growth stocks then I would stay away from AAP right now even though their Debt/Equity is amazing.
Before I would trade just about any stock that fit my technical parameters. Unfortunately, I have had to learn the hard way that the fundamentals of a stock are just as important (if not more) than the technical setups.
Technical Analysis for Advance Auto Parts (AAP)
Advance Auto Parts is currently in a short Reverse Lightning Trade setup. The current exit is the pink line at $97.84. But if price continues to go up and hits the blue line at $201.32 then the exit will move to just above the 50% Fibonacci retracement level at $150.77. This will be the final move for the exit even if price continues to go higher before hitting an exit level.
AAP is also in the beginning of a buy setup using the Reverse Lightning Trade. The current exit is at $203.59 (the pink line). If price retrace down to the 38% Fib retracement line first at $139.92 then the exit would move to just below the blue line at around $176.50. But if the price continues to move down without hitting the exit and goes all the way down to the bottom blue line at $78.73 then the exit moves to $127.00. This is just south of the 50% Fib retracement line.
Even if price continues to go lower the exit doesn’t move lower.
So there you have it, a short setup and a long setup for Advance Auto Parts with precise entries and exits given.
Popular Links
Here are a couple of links if you are looking at how I view the market and some trade setups. You can create your own trading style and setups. Quit paying losing traders to teach you. The only thing they teach is how to lose money.
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