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Published on: 8/25/2003
Last Visited: 12/19/2005
"Consumer retail is a pretty big space," says Senior Analyst Robert Straus."Right now, I'm concentrating on the automotive after-market service area, rent-to-own space and consumer electronics."He is most enthusiastic about the latter, due to the enormous digital replacement cycle going on."Consumer electronics, unlike some other areas, really does have something for everyone," Straus says.
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In the automotive aftermarket, Straus says there are two sides to the picture: parts retailers and service; he focuses on the service end of the industry."This is because industry-wise, the fundamentals are great," he says."There are more cars on the road, driving more miles than ever before and people not only are less willing to maintain their cars on their own, but frankly lots of times are incapable of doing so because they just don't have the skill set or the equipment that's needed to make repairs.Top pick is Monro Muffler Brake (MNRO)."The company currently has 565 stores, a number I expect to increase significantly through acquisitions," he says."The company is driving growth by attracting customers for oil changes, then upgrading them to other types of services, including scheduled maintenance.This is a very nice margin business which at the end of the day, increases their revenues, and then further leverages up the four walls of their retail store."
Straus also indicates that the rent-to-own space is relatively uncovered but offers plenty of opportunity, with 44.5 million households that are the right demographic to utilize such services."If you look at the rent-to-own industry, there are three million active customers, so I believe the segment is underserved."Straus follows two names , Rent-Way (RWY), a turnaround story, and Aaron Rents (RNT).