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Wednesday's Featured News Advance Auto Parts is A Great Risk/Reward Play If EPS DeliversWritten by Gabriel Osorio-Mazilli. Published 9/22/2025. 
Key Points - The current setup in the automotive industry has a few similarities to that of the post-COVID-19 environment, creating a new opportunity.
- Advance Auto Parts is exposed to another cycle of outperformance in the industry, with the right fundamental setup.
- Institutions are buying ahead of the forecasted EPS expansion scenario that's coming to this stock.
Earnings per share (EPS) growth is a primary driver of stock price performance. One simple way for investors to find strong upside opportunities is to target companies trading well below their relative highs yet positioned to close that gap based on anticipated EPS growth. In the automotive sector, one company currently fits this profile, offering attractive upside and a discounted valuation. This setup provides an appealing risk-to-reward ratio for buyers—provided the company delivers on its EPS targets. what I just learned about what's unfolding in the White House is truly stunning…
And you need to see it for yourself.
Once you see what's unfolding behind the scenes, you'll understand why I rushed this interview and opportunity to you today. Click here to watch this video Even if those targets fall short, the stock's already low valuation offers a cushion, limiting potential downside. That company is Advance Auto Parts Inc. (NYSE: AAP). AAP plays a key role in the parts supply chain for both wholesale and retail customers. With current trade tariffs impacting the U.S. market for new and used vehicles, Advance Auto Parts could well deliver on its EPS promise—here's why. Breaking Down the Advance Auto Parts Setup Despite a year-to-date rally of 28.2%, AAP still trades at roughly 85% of its 52-week high. Back in 2022, it reached as much as $244 per share amid similar industry dynamics that are unfolding today. After the COVID-19 lockdowns disrupted semiconductor and chip imports, new-vehicle production stalled, pushing consumers toward used vehicles. While the supply chain isn't as severe now, ongoing tariffs are slowing new-vehicle manufacturing and imports, again nudging buyers into the used-car market. Used vehicles require more maintenance, and that drives demand for aftermarket parts from both dealers prepping cars for sale and individual owners maintaining their vehicles. This dynamic underpins MarketBeat's EPS consensus forecast of $1.05 per share by Q3 2025. Momentum Arriving Sooner Than Expected Wall Street models a 52% EPS growth rate from today's 69 cents per share. Yet the most recent quarterly result of 69 cents easily topped the 59-cent consensus, suggesting these dynamics are already playing out. A useful valuation metric here is the price-to-earnings-growth (PEG) ratio, which compares current valuation to projected EPS growth. At 0.3x, Advance Auto Parts currently prices in only about 30% of its expected growth, indicating significant upside remains. Institutional interest further underscores the bullish case. As of August 2025, State Street boosted its AAP holdings by 13.5%, lifting its stake to 4% of the company—valued at $111.9 million (Source). Whether driven by momentum, fundamentals, or both, professional investors appear confident in AAP's prospects. Add in a market capitalization of just $3.6 billion, and you have a stock that can potentially double more easily than larger peers. At the same time, the low base limits the magnitude of any downside, making Advance Auto Parts an appealing risk-to-reward opportunity heading into the next few quarters.
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