Looking For A Defensive Stock Without Global Exposure? Check Out Autozone

• AutoZone, Inc. AZO has seen an almost 27 percent rise in its share price over the past one year.
• Citi’s Kate McShane reiterated a Buy rating on AutoZone, while raising the price target from $785 to $810.
• While listing AutoZone as Citi’s Top Pick in Auto Parts Retail, McShane said that this is a defensive stock during volatile market phases, without global exposure.

“The auto parts sub-industry has the lowest correlation to the market, which is expected given the defensive nature of their business,” McShane explained, while stating that AutoZone was the best performing retail stock in the Broadlines/Hardlines segment, both through the dotcom and real estate bubble bursts.

According to the Citi report, “Auto parts retailers tend to put up stronger comps when markets decline as consumers pull back on spending discretionary spending and tend to keep their cars longer. As it is, the average age of car on the road is at an all-time high of 11.5 years.”

AutoZone’s defensive nature during times of market volatility is due to its products largely being need-based. McShane mentioned that auto parts retailers tend to “post stronger comps following weakness in financial markets.”