1 Reason To Avoid Autozone
With new cases of the coronavirus spiking in the US and worldwide .
With the already historic unemployment levels and job losses in recent months .
And with many Blue Chip stocks looking vulnerable when they’re supposed to be among the best areas to invest your capital.
There are few safe places to invest today. And this number is growing smaller every day this crisis lasts.
The key to continue compounding your investments and build wealth is to keep investing well over time.
This is a huge part of things.
But another huge part of this that few think of is also losing as little capital as possible.
The fewer investment losses you have the more capital you keep. And the more capital you keep the faster you achieve your retirement goals.
In recent articles I’ve shown you several stocks to avoid investing in…
- 1 More Reason To Avoid Burlington Stores
- 2 Reasons To Avoid Home Depot
- 3 Reasons To Avoid Target
- 2 Reasons To Avoid Lowe’s
- 1 Reason To Avoid AT&T And Its 7% Dividend
- 1 More Reason To Avoid Nike
- 2 Reasons To Avoid Starbucks
- 4 Reasons To Avoid Kohl’s
Today I want to show you another stock to avoid so you can continue growing your investment portfolio safely.
1 Reason To Avoid Autozone
It’s Got An Enormous Amount of Debt
Normally in these articles I talk about things like valuation, profitability, cash flow, the affects coronavirus is having on a company’s financials, among other things.
But frankly none of those matter with Autozone (AZO) due to its enormous debt load.
As of this writing Autozone is a $26.5 billion market cap automotive do it yourself store where you can buy parts to fix your vehicles.
Its most recent quarterly data showed it has $510 million in cash. While it has $8.14 billion in short term and long-term debt and capital leases.
Its debt is 16X higher than its cash levels. And total liabilities make up 112.7% of its current balance sheet.
It has so much debt that after you subtract total assets from total liabilities that you get a value of less than $0.
This is rare when you see this but it’s horrible.
I want to invest in safe stocks that will be around for decades to help me build wealth over the long term. This helps insure I lose as little money as possible over time.
Typically, this means I invest in companies that have little to no debt compared to their cash and equity.
And I look to invest in companies with a debt to equity ratio below 1… But not negative like Autozone’s is.
It can support debt at its current levels because its so profitable on an operating profit, net profit, and free cash flow basis. But its debt levels still bring an enormous amount of risk to owning Autozone shares right now.
Especially with the massive uncertainty in the vehicle market right now due to the coronavirus.
Here are some of our recent articles talking about that.
- 3 Reasons To Avoid Ford
- 3 Reasons To Avoid Volkswagen
- 2 More Reasons To Avoid Ford
- 2 Reasons To Avoid General Motors
For this reason of its huge debt, I recommend you avoid investing in Autozone – even though it earns large profits and cash flows.
Click the links below to see the stocks we recommend helping Depression Proof Your Portfolio.
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Disclosure – Jason Rivera is a 13+ year veteran value investor who now spends much of his time helping other investors earn higher than average investment returns safely. He does not have any holdings in any securities mentioned above and the article expresses his own opinions. He has no business relationship with any company mentioned above.