LKQ Corporation : A company that mines value from junk cars

LKQ (NASDAQ : LKQ) buys junk cars and sells parts for repairs. These refurbished parts can cost 25% to 50% less than newly manufactured ones. Insurers have increasingly turned to refurbished parts to reduce their repair costs following collisions. LKQ's vast distribution network, built over 16 years through acquisitions and organic growth, gives it key competitive advantages, like faster delivery times and higher in-stock rates than rivals.

U.S. car sales have rebounded to close to prerecession levels, which will boost the number of newer cars on the road, and those are more likely than old cars to be repaired rather than declared total losses after accidents.

LKQ also has excellent opportunities to expand overseas. In Europe, for example, just 7% of parts used after collisions are alternative parts like the ones LKQ sells, versus 38% in the U.S. Last year, LKQ earned $1.06 a share, and Wall Street expects that number to double by 2016. The stock sells for 19 times this year's earnings forecast of $1.37 a share.


The company has good long term prospects and this makes it a good buy. Long term a target of $35 can be given.

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SENSEX

The S&P BSE Sensex gained as much as 157 points to end at its fresh record closing high of 26,560.15 on Wednesday.

Across-the-board gains were also seen on continued foreign funds inflows amid investors churning portfolios ahead of monthly expiry in equity derivatives tomorrow, say brokers. 

A rally in the Asian markets on upbeat US economic data and easing crude oil price also buoyed market sentiment. 

The prospect of further lashings of liquidity in Europe was taken as a positive for emerging markets and MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.4 per cent to its loftiest since January 2008, Reuters reported. 

Foreign institutional investors reduced the pace of funds flow into Asia in August, but India is still among those countries in the region that received the maximum inflows during the month, an HSBC survey says. 

"China remains the most over-owned market in the region, followed by India," the global brokerage firm said. 

Meanwhile, mutual funds have turned more bullish and bought $8.0 billion worth of Asian equities in the past four weeks (ended August 20) compared with net inflows of $1.1 billion in the previous four weeks, according to EPFR Global. 

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Gold: Declines to a Two-Month Low on Fed Rate Outlook

Gold fell to a two-month low in the longest run of declines since June in London on the outlook for higher U.S. interest rates that strengthened the dollar. Platinum headed for the longest run of losses in 27 years.

Many U.S. policy makers raised the possibility they may boost rates sooner than anticipated, minutes of the Fed’s July meeting showed yesterday. The dollar climbed against 10 major currencies after the minutes, and was little changed after reaching a six-month high today. Futures traders are seeing more chance of rising interest rates by the middle of next year.

Fed Chair Janet Yellen will provide her take on the latest data on labor markets in a speech tomorrow at a meeting of central bankers in Jackson Hole, Wyoming. Gold slid 28 percent last year on expectations U.S. stimulus would be reduced as the economy strengthens. Prices rose 6.6 percent this year, partly as unrest in Ukraine and the Middle East increased haven demand.

The market is still highly sensitive to expectations of what the Fed will do and when. The physical market is still extremely quiet.

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BMW: Highest profitability from car making in three years

Bayerische Motoren Werke AG, the world’s biggest manufacturer of luxury autos, reported its highest profitability from car making in three years as the X5 sport-utility vehicle won customers and demand rose in China.

Second-quarter earnings before interest and taxes at the auto unit widened to 11.7 percent of sales from 9.6 percent a year earlier, Munich-based BMW said today in a statement. The margin was the highest since the third quarter of 2011 and beat figures of 9.9 percent at Audi AG, the world’s second-largest maker of premium cars, and 7.9 percent at Daimler AG (DAI)’s Mercedes-Benz Cars unit.

BMW, which reiterated a 2014 forecast today of a significant increase in pretax profit, is introducing 16 new or refreshed models this year to win customers and fend off efforts by Volkswagen AG’s Audi and the Mercedes brand to take the global premium-car sales lead by 2020. First-half sales of the full-size X5 jumped 30 percent, while the up-market 5-Series sedan won 7.6 percent more buyers.

BMW plans to deliver more than 2 million vehicles in 2014, including the Mini small-car and Rolls-Royce ultra-luxury marques, reaching an annual sales target two years ahead of schedule. First-half group deliveries rose 6.9 percent to 1.03 million cars, including a 10 percent jump at the BMW brand. Including the Mini nameplate, the car maker’s Chinese sales surged 23 percent in mainland China in the period.

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