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Today's Bonus 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 one of the primary drivers of a stock's performance. A simple way for investors to identify upside opportunities is to look for companies trading well below their recent highs that still have room to rally as future EPS targets are met. In the automotive sector, Advance Auto Parts Inc. (NYSE: AAP) fits this profile, offering compelling upside at a discounted valuation. Even if the company falls short of its most ambitious growth forecasts, the shares already trade at a steep discount, limiting potential downside. Breaking Down the Advance Auto Parts Opportunity A massive money shift is underway in the AI market. And it's opening up an extraordinary opportunity in a NEW kind of AI stock. Details here... Despite a year-to-date gain of 28.2%, AAP shares still trade at just 85% of their 52-week high. In mid-2022, the stock reached $244 per share amid similar industry dynamics—supply disruptions that drove demand for used cars. Back then, COVID-related lockdowns interrupted semiconductor imports essential to new-car production. Today, auto tariffs and elevated costs have once again crimped new-vehicle supply, leaving many buyers to explore the used-car market. Used vehicles require more maintenance, which benefits aftermarket suppliers like Advance Auto Parts. Dealers refurbishing trade-ins and consumers maintaining older cars both represent growing sales channels. That dynamic underpins the MarketBeat EPS consensus forecast of $1.05 by Q3 2025. Momentum Arrives Ahead of Schedule Wall Street expects EPS to climb 52% from today's 69 cents, but the latest quarter suggests this tailwind is already in motion. The company reported 69 cents in EPS—well above the 59-cent consensus. Valuation metrics reflect that optimism. AAP's price-to-earnings-growth (PEG) ratio of 0.3x indicates that roughly 70% of the anticipated growth isn't yet priced into the shares. Institutional investors are taking note. In August 2025, State Street boosted its position in Advance Auto Parts by 13.5%, increasing its stake to $111.9 million—about 4% of the company. Whether driven by momentum, fundamentals, or both, professional investors clearly see opportunity in AAP. With a market capitalization of $3.6 billion, the company has greater upside potential than larger peers—doubling in value is more attainable, while significant disappointments would be required to push the shares meaningfully lower. That asymmetric risk-to-reward profile makes Advance Auto Parts a compelling play for investors seeking exposure to the aftermarket auto parts sector.
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