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10 Auto-Related Stocks That Could Benefit from Slow Sales

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Alan Brochstein investigates 10 Auto-Related Companies With Potential to Do Well in a Weak Economy

In early August, I discussed several potential beneficiaries of a lingering slow economy, including dollar stores, pawn lenders and off-price retailers. Today, I want to extend the analysis to a similar theme: used cars.

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New car sales have been weak now for a few years and are gradually recovering, but this weak economy suggests we'll continue to see cars aging and owners hanging onto their cars longer than they did prior to the Great Recession.  Over the past decade, annual sales had been consistently in the 17-18mm units a year before plunging to 9mm and recovering now to approximately 13mm according to government data. Tighter credit and high unemployment are, to my mind, the primary challenges to new car sales.

An obvious beneficiary of such a trend would be used car dealers, but there are several other ways to take advantage of depressed new car sales, including parts retailers and manufacturers. Less obviously, one could consider companies that enable car parts to be recycled - perhaps very interesting due to those companies' limited competition. Here is a list of companies that I believe might benefit from the trend of drivers hanging onto their cars:

Alan BrochsteinFounder, Invest By Model and AB Analytical ServicesTradeKing All-Star Commentator

Disclosure:  Alan Brochstein is currently holding no positions in the securities mentioned in this post.

Any strategies discussed and examples using actual securities and price data are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. In reading content in the Trader Network, you may gain ideas about when, where, and how to invest your money. Although you may discover new ideas or rationale that may be compelling, you must ultimately decide whether or not to put your own money at risk. Consider the following when making an investment decision: your financial and tax situation, your risk profile, and transaction costs. Alan Brochstein maintains a business relationship with TradeKing.

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