878.34 -7.47 (-0.85%) Buy

Don't consider buying AZO now, it is risky at the moment

13 min read

AUTOZONE INC has destroyed investor wealth on Tuesday. It lost -0.85% to close at 878.34. On a day when the overall market breadth was 35%, it closed higher than 11% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.

[Themes containing AZO]

AZO showed a strong up trend over the last 3 months. During this period AZO gained +14.77% and saw a maximum drawdown of -9.35%. There were 4 long signals during this period that returned a cumulative of +3.43% to investors.


AZO has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 7 days, AZO underperformed the SP500 index on 50% days. Which indicates that on days AZO underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

AZO was profitable on 56% days in the last three months. During this time, it delivered on average +0.24% per day. It delivered it's worst daily return of -7.6%, during this period, on Wednesday, 17 Oct, 2018. There was initially a bearish trend during this period which started on 14 Sep, 2018 and went on till 18 Sep, 2018. The trend delivered -4.29% losses to investors. This was followed by a bullish trend that started on 1 Nov, 2018 and ended on 8 Nov, 2018. This bullish trend delivered +8.61% to investors.

AZO had 9 profitable and 3 loss making months over the last year. AZO was profitable in more months than SP500 index. AZO was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -13.16% compared to -7.28% returned by SP500 index in Oct 2018. AZO and SP500 index, both had periods of 6 consecutive profitable months.

Thirty to 40 years ago, most financial decisions were fairly simple.
-- Scott Cook

AZO is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in AZO's volatility from 13 Sep, 2018 to 18 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that AZO has significant positive skewness in it's return distribution. This indicates that investors can expect AZO to recover from drawdowns quickly. Which makes AZO a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in AZO derivatives at this moment can consider 'Bull Call Spread' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than AZO. Therefore, SP500 must receive a lower allocation than AZO in your portfolio. AZO usually has shorter drawdown period than the SP500 index.

Based on your interest in AZO you may find it interesting to know that I and AMRN have both shown remarkable performance this year and deserve to be on every investors' watchlist.

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