Top 5 Stocks to Invest In According to Jeffrey Ubben’s ValueAct Capital

4. LKQ Corporation (NASDAQ: LKQ) 

Ubben’s Stake Value: $912,116,000
Percentage of Jeffrey Ubben’s 13F Portfolio: 10.64%
Number of Hedge Fund Holders: 36

LKQ Corporation (NASDAQ: LKQ) is a Chicago-based company dealing in automotive equipment, including tires, wheel, and performance-related accessories. As of Q1 2021, ValueAct holds 21.5 million shares in the company, worth $912 million. LKQ Corporation (NASDAQ: LKQ) stands fourth in the list of the top stocks to invest in according to Jeffrey Ubben’s ValueAct Capital. 

In Q1 2021, LKQ Corporation (NASDAQ: LKQ) reported $0.94 earnings per share, surpassing the estimate of $0.63. Overall, the company generated $3.1 billion in revenues in the quarter. The LKQ stock has gained by 80.5% in the past year and 34.8% year to date. 

Bonsai Partners released its Q1 2021 investor letter and mentioned LKQ Corporation (NASDAQ: LKQ) among other stocks. Here is what the firm has to say: 

“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.”