1. LKQ Corporation (NASDAQ: LKQ)
Number of Hedge Fund Holders: 36
LKQ Corporation (NASDAQ: LKQ) is a distributor of replacement parts, components, and systems for the repair and maintenance of vehicles. The stock, despite not being a traditional recycling stock, ranks 1st on our list of the best recycling stocks to invest in because LKQ Corporation (NASDAQ: LKQ) recycles used autos to reduce landfill waste and provides cheaper alternatives to new car parts by promoting the reuse and recycling of older car parts.
This May, LKQ Corporation (NASDAQ: LKQ) acquired Green Bean Battery and its assets, aiding the company in its mission to be the leading provider of alternative parts for vehicle repair. In the first quarter of 2021, LKQ Corporation (NASDAQ: LKQ) had an EPS of $0.94, beating estimates by $0.31. The company’s revenue was $3.17 billion, beating estimates by $208.21 million and up 5.66% year over year, and it has a gross profit margin of 39.67%. The stock has gained 32.75% in the past 6 months and 41.85% year to date.
As of the end of the first quarter of 2021, 36 hedge fund holders out of the 866 tracked by Insider Monkey held stakes in LKQ Corporation (NASDAQ: LKQ) worth roughly $1.54 billion. This is compared to 50 hedge funds in the previous quarter, with a total stake value of $1.61 billion.
Bonsai Partners mentioned LKQ Corporation (NASDAQ: LKQ) in its first-quarter 2021 investor letter. Here’s what they said:
“LKQ is the largest provider of alternative collision and mechanical automotive parts in the United States. In Europe, they are the leading distributor of general automotive maintenance parts and supplies. Its shares appreciated 20.1% during the quarter.
During the quarter, LKQ shared its fourth-quarter results: showing a slight revenue decline and a nearly 30% increase in quarterly profit Vs. the same period last year. COVID has proved a surprising catalyst for my investment thesis which revolves around optimizing their recent large acquisitions that were never efficiently integrated.
Admittedly, in addition to LKQ’s quarterly performance, thematically, there has been broad enthusiasm for “re-opening” trades, of which, LKQ has been a beneficiary. Most importantly, the prior overhang related to LKQ’s debt burden is now all but behind us. Their net debt to EBITDA ratio now sits below 2x, a stark change from the near 3x leverage ratio before the pandemic. At that time, LKQ’s leverage had the potential to spiral upward to nearly 4-5x if the business experienced a prolonged shutdown. It’s good to be past this issue.”
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