In short: Her own mistake: "I stepped on a total landmine in 2023 with Advance Auto." She kept telling herself a new management team would fix it; "they were the worst. It totally blew up. It was a horrible investment." A simple peer check against O'Reilly and AutoZone would have kept her out.
Advance Auto Parts sells car parts to mechanics and do-it-yourselfers, in the same business as O'Reilly and AutoZone. Harrington bought it in 2023 for her income strategy and calls it "a total landmine": the stock "totally blew up" and was "a horrible investment."
Her lesson is about the check she skipped. She kept talking herself into it ("now they have a new management team, now this, now that") instead of asking a simple question: why does this company pay a far higher yield than its healthy competitors? Put next to O'Reilly and AutoZone, Advance was plainly "the worst." When one company in a sector yields much more than a thriving peer, the market is usually warning you that the dividend or the business is in trouble.
20:43If you know a thriving company in that sector, it only has a 3% yield, but this one has an 8% yield. Makes you wonder why the market's letting one have such a high yield and not the other one. — Yeah. — Just real quick on that, I stepped on a total landmine in 2023 with Advance Auto. — So, it's Advance Auto, O'Reilly, and Autozone, and I kept thinking, oh well, now they have a new management team, now this, now that. No.
In short: Named only as a peer — the competitor (with O'Reilly) whose downbeat message AutoZone is expected to echo; one of the three parts stocks that were down ~30% on average by fall 2008. No separate view argued.
In short: DOWNGRADED from Buy to HOLD — moved from the Buys table to Holds/Trims (lot 05/01/2026 @ $58.78, marked $45.22, −23.07%). "The post-earnings decline was a bit excessive… though in truth it was not entirely unjustified": the stock "dropped 24.6% after earnings, despite management maintaining its full-year sales, comparable-sales, operating-margin, and approximately $100 million free-cash-flow outlook." What broke: comparable sales "declined 0.5%, reversing from 3.5% growth in Q1" — "the key metric the market wanted to see" — with weakness from DIY customers "particularly during the final four weeks of the quarter," while Pro still grew low-single digits. What kept working: adj. gross margin 46.2% vs 43.8%, adj. operating margin 5.6% vs 3.0%, adj. EPS $1.03 vs $0.69, YTD FCF positive, net leverage 2.1× from 2.4×. The caveat: "$0.31 of adjusted EPS came from tariff refunds… underlying EPS was approximately $0.72," and the $2.60–$3.30 guidance raise was "primarily because of higher-interest income, not stronger operating expectations." Verdict: the market overreacted "in magnitude" — "a reset in sales expectations, not evidence that the entire turnaround has failed." Valuation ~12.4× 2026 guidance midpoint, ~0.32× sales, ~7× normalized earnings at the original 7% margin target — "not exceptionally cheap against this year's still-depressed earnings, but… inexpensive against credible normalized earnings power." Technical trigger: "a weekly close above $48/share should set off some momentum higher and close the 'earnings gap.'" Watch-list: DIY stabilizes, Pro stays positive, margins hold without refunds, 3.8–4.5% op margin + positive FCF delivered, market hubs win share. "AAP Rating: HOLD."
Advance Auto Parts sells car parts to two kinds of customers: do-it-yourselfers who walk into a store, and professional repair shops ("Pro"). For years it was badly run compared with rivals AutoZone and O'Reilly, with thin profit margins. A new CEO arrived in 2023 and did the unglamorous fixes he promised — sold a side business (Worldpac), closed weak stores, consolidated warehouses and paid down debt. Haymaker bought it in May 2026 at about $59 as a turnaround bet.
The latest quarter was mixed. Profits kept improving — the share of each sales dollar kept as operating profit nearly doubled, from 3% to 5.6%, and the company started generating spare cash. But same-store sales slipped 0.5% after rising 3.5% the quarter before, mostly because lower-income DIY customers cut back late in the quarter. And part of the profit beat was flattering: 31 cents of the $1.03 per share came from one-time tariff refunds, and the raised guidance came from interest earned on cash rather than from selling more parts. The stock fell about 25%.
Haymaker's view is that investors overreacted in size but not in direction: sales recovery is slower than hoped, but the turnaround hasn't failed. At about $44–45, the shares are cheap if the company can eventually earn the 7% margins it originally targeted (roughly 7 times those earnings), though not especially cheap on this year's depressed profits. So the rating drops from Buy to Hold — still own it, don't add. The things to watch are DIY sales steadying, margins holding without refunds, and on the chart a weekly close above $48, which would suggest the post-earnings drop is being repaired. Note that "Hold" is exactly the category the same post says to look at first when raising cash.
In short: Pick of the Week — a multi-year turnaround (CEO Shane O'Kelly, ex-HD Supply) entering the "let's see if it's working" phase. Phase 1: WorldPac sale ($1.5B / $1.2B after-tax) fixed solvency; Phase 2: 500+ stores + ~200 independents closed, 38→~16 DCs, Market Hubs, first positive full-year comps in 3 years (+1.1% Q4), adj. op margin +200bps to 2.5%. Upcoming earnings is the catalyst — wants comp acceleration, margin toward 3.8–4.5% FY26 guide (vs 10–12% historically), $160M FCF. Deep discount to AZO/ORLY because margins are still 2–4%; on P/S (the turnaround metric) the stock "could easily surge 100%, or more" over 12–24 mo. Run-up then eased $70→$59 — partial position / DCA; "an investment, not a trade."
Advance Auto Parts is a national auto-parts retailer that fell on hard times — sales at existing stores shrank for years and the stock collapsed from its 2022 peak. A new CEO (Shane O'Kelly, who ran Home Depot's supply business) is roughly three years into fixing it. First he sold off a side business (WorldPac) for $1.5B to make sure the company wouldn't run out of money. Then he shrank it to health: closing more than 500 weak stores, slashing the number of warehouses from 38 to about 16 modern ones, and building bigger "hub" locations that stock more parts and deliver faster. The early payoff is showing — 2025 was the first year in three that same-store sales grew again, and profit margins started to climb.
The bet now is that the recovery accelerates. The key tell is the next earnings report: Haymaker wants to see sales growth speeding up, profit margins inching toward the 3.8–4.5% the company is guiding to (it used to earn 10–12%), and the company finally generating cash (about $160M projected this year) instead of burning it. The opportunity comes from the gap to rivals: AutoZone and O'Reilly earn 14–18%+ margins while AAP earns 2–4%, which is exactly why AAP is so cheap. Because earnings are temporarily tiny, Haymaker again uses price-to-sales (not P/E) to value the turnaround — and on that basis the stock could double or more over the next 12–24 months if the plan keeps working. It's risky and has already bounced around (recently easing from $70 to $59), so the advice is to buy gradually (dollar-cost-average) a partial position — "an investment, not a trade."
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