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Top Stock #5 – AutoZone (AZO)

Americans are as dependent on automobiles as they ever have been, and that means more older cars are on the road, and demand for parts is up dramatically. With 4,100 stores, AutoZone (AZO) is the #1 auto-parts chain in the U.S. and is the best stock to capitalize from this trend.

Though the "cash for clunkers" program has caused a brief uptick in new car sales, I remain convinced that this is temporary. With the rebates for old cars now gone, new vehicle sales will stay soft and AutoZone will remain a great retail play.

I still believe that this stock is a great buy right now and will deliver big profits in the final months of 2009 and beyond, even though AZO has had a tough go of it lately. First, the Census Bureau indicated that sales at auto-parts and tire stores fell 4% in May from a year earlier, despite rising significantly across most of the preceding months. Then Wedbush Morgan initiated coverage on AutoZone as "neutral," on fears that the company's margins are plateauing. Lastly, new auto sales have seen a brief uptick thanks to the government's "Cash for Clunkers" program, and some think that pent up demand for new cars is going to spark a return to the showroom very soon for many Americans.

That's a bunch of gloomy news to digest all at once, and the stock was held back recently. But this stock is still firmly rated a solid B in Portfolio Grader and has seen continued success. The stock's is a bit of a laggard to the earnings party, since its last quarterly numbers were released at the end of May, but I fully expect this company to show its powerful sales and profits once it sets a date for its next earnings report.

Stick with AZO for now because I fully expect it to bounce back quickly.

Here now are 20 stocks you can't trust. If you own these losers, sell them now. If you don't — avoid them at all costs.

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