What Happened?
Shares of auto parts and accessories retailer Advance Auto Parts (NYSE: AAP) fell 3% in the afternoon session after a broader market downturn as former President Trump announced potential 30% tariffs on goods from the European Union and Mexico.
The announcement has sparked concerns of a renewed trade war, leading to widespread investor anxiety and a sell-off in the broader market. For a retailer like Advance Auto Parts, which sources products through a global supply chain, the prospect of new tariffs is particularly concerning. Tariffs, which are taxes on imported goods, can lead to higher costs for the company. These increased costs could either be absorbed, squeezing profit margins, or passed on to consumers through higher prices, which could potentially dampen demand for its products. The uncertainty surrounding future trade policies is weighing on investor sentiment for companies with significant international supply chains.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Advance Auto Parts? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Advance Auto Parts’s shares are extremely volatile and have had 32 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
Advance Auto Parts is up 28.4% since the beginning of the year, and at $61.79 per share, it is trading close to its 52-week high of $64.44 from July 2024. Investors who bought $1,000 worth of Advance Auto Parts’s shares 5 years ago would now be looking at an investment worth $445.91.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
