This Recession-Proof Stock Soared Thru the Dot-Com Bust, the Financial Disaster, and the 2022 Inflation Spike. Is It a No-Brainer Buy for the Trump Tariff Era?

President Donald Trump has barely been rather then enterprise for two months, nonetheless his insurance policies and solutions luxuriate in already rocked the stock market.

The S&P 500 slipped into a rapid correction in March, and the Nasdaq Composite stays there on the contemporary time. After two years of a roaring bull market, investors are adopting a defensive posture as user sentiment impulsively weakens, inflation proves stickier than anticipated, and Trump’s on-again, off-again tariffs set up The USA’s titans of industry on edge.

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Picking stocks is now not with out a doubt straightforward in a market love this, and nearly every stock tends to be a loser in a recession. Nonetheless, one company has confirmed its mettle over and over in now not easy financial cycles. Or now not it is now not a low-tag retailer love Walmart or a healthcare huge love Johnson & Johnson.

The stock I am speaking about is AutoZone (NYSE: AZO), the unsung auto sides stock that has cranked out beneficial properties in nearly about every financial environment in in vogue historical past.

Image offer: Getty Photos.

A excellent track file

Now now not finest has AutoZone climbed thru financial crises, equivalent to the dot-com bust, the financial crisis, and the 2022 inflationary hang market, nonetheless it would possibly well also moreover construct even better at some level of stressful cases.

The chart below reveals AutoZone’s efficiency in the 2000s when put next to the S&P 500, with the recessions shadowy in gray. As you’d also leer, the stock bounced at some level of every and each the dot-com recession and the financial crisis on the tip of the decade.

AZO data by YCharts.

The chart below reveals the stock efficiency over the final 5 years. Yet again, you’d also leer that the stock continued to construct thru 2022, even while the huge market fell sharply.

AZO data by YCharts.

Over the final 5 years and thru more than one financial shocks, AutoZone became as soon as one among the few stocks to post sturdy beneficial properties in each and each 2021 and 2022, transitioning smoothly from the pandemic to the financial reopening. The end of that chart moreover reveals that AutoZone has kicked off 2025 on the lawful foot, at the same time as the S&P 500 is crumbling again. Shares of AutoZone are up 18% Twelve months to this level thru March 28, while the S&P 500 is down 4.3%.

AutoZone’s secret sauce

The finest cause in the wait on of AutoZone’s success is that auto sides is a countercyclical industry. Folks are inclined to use more cash on auto sides when cases are tricky due to they lengthen shopping for price contemporary autos. When their gift autos rupture down, the finest different is to obtain them repaired. On this sense, aftermarket auto sides act as a charge-efficient exchange for price contemporary or even old vogue autos, so query tends to upward thrust for aftermarket auto sides in recessionary environments.

AutoZone’s identical-store gross sales luxuriate in historically accelerated in recessions, especially on the tail end, when patrons luxuriate in fully absorbed the downturn. As an illustration, comparable gross sales jumped 9% in fiscal 2002 (which ended Aug. 31 of that Twelve months), up from 4% from the prior Twelve months. In fiscal 2010, comps rose 5.4%, up from 4.4% in fiscal 2009. And AutoZone’s comparable gross sales soared thru each and each 2021 and 2022, up 13.6% and 8.4%, respectively, as high old vogue automobile costs propelled query for exchange sides as an alternative.

While industry dynamics show some of its success, AutoZone deserves among the indispensable credit besides. Though O’Reilly Automobile has moreover been a immense winner on the stock market, AutoZone’s returns luxuriate in crushed those of comrades love Advance Auto Formulation and Exact Formulation, which owns Napa.

AutoZone has blanketed the nation with stores, giving customers, including drivers and mechanics, handy entry to its stock. It has moreover engaging by the real channel, meaning auto restore shops, where product availability and coast are indispensable. Management has been an magnificent capital allocator besides, aggressively shopping for backstock, which has accelerated its returns.

With tariffs on the plot in which, is AutoZone a buy?

President Donald Trump correct announced a 25% tariff on international auto imports final week. Shares of domestic automakers love Celebrated Motors and Ford Motor Company sank on the information, while AutoZone popped, a signal that investors accept as true with it would possibly well luxuriate in elevated automobile costs.

CEO Philip Daniele has said on outdated earnings calls that the corporate will dawdle along any elevated costs from tariffs to the user, displaying its margins mustn’t be impacted by any contemporary import taxes. That is moreover a mirrored image of AutoZone’s aggressive energy, as aftermarket sides on the total signify the bottom-tag probability for a needed restore, so the corporate can dawdle along those costs with out shedding customers.

As financial uncertainty washes over the stock market, AutoZone appears to be like to be poised to thrive any other time. The stock is reasonably valued at a tag-to-earnings ratio of 25. It continues to broaden, with 241 contemporary stores over the final Twelve months, and investors are already expecting its outperformance, given the stock’s double-digit beneficial properties this Twelve months.

Whenever you are shopping for a safe stock to scamper out the commerce warfare volatility, it is worthy to search out a bigger different on the contemporary time than AutoZone.

Don’t omit this 2nd probability at a doubtlessly profitable different

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*Stock Consultant returns as of March 24, 2025

Jeremy Bowman has no set up in any of the stocks talked about. The Motley Fool recommends Celebrated Motors and Exact Formulation. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the creator and pause now not essentially focus on those of Nasdaq, Inc.