An all-weather stock for this volatile market and economy that even thrived during the financial crisis

CNBC's "All-Weather" stock list, designed to identify stocks that can thrive in any market, is adding AutoZone (AZO) following an upgrade from Bank of America to buy with a price target of $4,800, representing a 25% gain from current levels. BofA anticipates AutoZone will benefit from consumers holding onto and repairing existing vehicles due to higher tariffs potentially increasing the cost of new cars by an average of $3,285 for US-assembled vehicles. Analyst Robert Ohmes also noted AutoZone's historical resilience, highlighting its outperformance during the 2008-2009 recession, suggesting it could benefit from rising unemployment and falling new car sales.

Analysis

AutoZone (AZO) has been added to CNBC's "All-Weather" stock list, a decision underscored by a Bank of America upgrade to "buy" with a price target increase to $4,800, suggesting a potential 25% upside. This positive outlook for AutoZone, which has consistently gained annually since the pandemic, is rooted in its perceived resilience against a backdrop of cash-strapped consumers, a slowing economy, and the impact of tariffs. Bank of America posits that tariffs, while increasing AutoZone's costs, could serve as a net positive by significantly raising new car prices—potentially by an average of $3,285 for US-assembled vehicles. This scenario is expected to encourage consumers to retain and repair existing vehicles, thereby bolstering demand in the auto aftermarket. Further supporting this thesis is AutoZone's historical performance; analyst Robert Ohmes highlighted that AZO, alongside O'Reilly Automotive, outperformed the S&P 500 by over 100% during the 2008-2009 recession. This suggests that rising unemployment and declining new car sales could drive a shift towards do-it-yourself repairs as consumers seek to save on labor costs, directly benefiting AutoZone. The company enjoys strong Wall Street sentiment, evidenced by 23 buy ratings and zero sell calls. The broader "All-Weather" list, designed for market turbulence, has seen mixed performance, with dividend-focused ETFs underperforming due to rising Treasury yields (10-year at 4.5%), while names like Netflix and Waste Management have shown resilience.

Key Decisions for Investors

• Investors seeking defensive exposure amidst potential economic slowdowns or heightened market volatility may find AutoZone (AZO) attractive, given its counter-cyclical demand drivers such as consumers extending vehicle lifespans and an increase in do-it-yourself repairs, particularly if tariffs elevate new car prices.
• Closely monitor trends in new car sales, unemployment rates, and consumer behavior regarding vehicle maintenance versus replacement, as these are critical factors underpinning the investment thesis for AutoZone.
• While AutoZone demonstrates robust fundamentals and strong analyst conviction, investors should acknowledge that its relative outperformance is typically accentuated during market downturns; sustained broad market strength could see such defensive assets temporarily underperform more cyclically sensitive investments.