One stat that stands out is that the average age of cars on the road today. It’s now over 10 years. Eventually this pent up demand from the Great Recession has to find its way out, but until then people would rather fix their old cars than buy new ones. If you’re fixing old cars, you need parts. A major supplier of parts to Advance Auto Parts (AAP) and AutoZone (AZO) is Dorman Products (DORM).
Dorman carries a Zacks Rank #2 (Buy) after three analysts raised current year estimates in the last 30 days. The Dorman story has been slow, steady, consistent earnings growth over the years. A quick look at the price and consensus chart shows the solid growth numbers.
From a technical standpoint, DORM is in a similar position to PLOW. However, DORM is a slower and steady story. A failed sustained breakout of $50 saw the stock price retreat down below $47 before finding enough strength to kick off a rally to a new high at $56. Then there was another small seesaw down below $50 and back up through $56 to new highs at $60.
What this stock’s history tells me is that support and resistance levels are not firm and are relatively wide zones. It has a cyclical nature and doesn’t adhere to strict trend lines but overall has a nice, fluttery, upwards motion. I wouldn’t be surprised given the stochastic sell signal from overbought territory earlier this month, if the stock comes back down to test as low as $54 before heading higher.