“For AutoZone, on a relative basis the stock was a notable underperformer from 2019. We think it bottomed in the first quarter of this year, and the strength that we’ve seen since the first quarter, in our view, is reversing the downtrend that had been at play. I think you see the slope for the 200 day curling higher as an argument for that reversal,” said Wald.
AutoZone is up nearly 40% this year. Its next earnings report is at the end of September.
Michael Binger, president of Gradient Investments, turned to the DIY home improvement sector instead, highlighting Home Depot and Lowe’s as two favorites.
“We think housing starts and sales, even though they’ve slowed a little bit, are still very strong. All these millennials who are purchasing homes right now, we feel that’s a secular tailwind for quite some time. Home Depot and Lowe’s are prime beneficiaries of what’s going on out there,” Binger said during the same interview.
Home Depot reported better-than-expected earnings Tuesday, but same-store sales came in slightly short of estimates as fewer people visited its shops to buy items for do-it-yourself projects. Lowe’s earnings are set for Wednesday morning.
“We like these stocks, we own them and we would buy them right here before they report,” Binger said.
Disclosure: Gradient Investments holds HD, LOW.