Automotive Aftermarket Sector Update (NUE, CPRT, LKQX, KAR)
March 19, 2010 9:38 AM
Analysts Anthony F. Cristello, Allen M. Hatzimanolis and B. Gregory Oliff Jr. at BB&T Capital Markets have released a report on the Automotive Aftermarket sector.
In their report, the analysts mention that prices for crushed auto bodies have moved significantly higher in recent months. Prices have increased from $168 per ton in December to $197 per ton in January. The current price is at $212 per ton, according to the report.
Analysts, citing commentary from Nucor Corporation (NYSE: NUE) CEO, Dan DiMicco, say that there has been continuous increase in scrap metal purchases from China, Turkey and Taiwan due to strong end demand. Analysts also believe that with spot prices for iron ore higher than contract rates, it is likely that large steelmakers will continue to add to their scrap metal inventories. Analysts expect scrap prices to go further up due to strong demand and tight supply.
Among the companies in the sector, analysts are bullish about Copart, Inc. (NASDAQ: CPRT), LKQ Corporation (NASDAQ: LKQX) and KAR Auction Services Inc. (NYSE: KAR). All three companies are rated Buy by analysts at BB&T Capital Markets.
