Here's Why You Should Retain LKQ Stock in Your Portfolio Now

LKQ Corporation LKQ, one of the leading providers of replacement parts, components and systems that are required to repair and maintain vehicles, is poised to gain from the acquisition of Uni-Select Inc. and restructuring efforts despite weak demand. Let’s see why you should retain this Zacks Rank #3 (Hold) stock in your portfolio.Strategic Acquisitions & Restructuring Efforts to Aid LKQLKQ’s strategic acquisitions are boosting its prospects. The acquisition of Uni-Select Inc. for $2.1 billion, completed on Aug. 1, 2023, has bolstered its global automotive vehicle parts distribution business. It will solidify LKQ’s pre-existing business operations in Quebec and is expected to boost revenue growth and improve margins. The company expedited the integration of FinishMaster, a subsidiary of Uni-Select, which will help it increase annualized Uni-Select synergies to $65 million by the end of 2026.The company’s restructuring plan that focuses on exiting non-strategic businesses, streamlining operations and optimizing logistics bodes well. In Europe, it resulted in increased efficiency of the logistics footprint, leading to a reduction in facilities and overhead costs. In North America, the company is aligning its cost structure with demand by rationalizing overhead costs. These actions aim to simplify the business, enhance efficiency and boost margins to maximize shareholder returns.LKQ completed its mega-yard expansion in Crystal River, FL, and began operations on the newly expanded site in December. Additionally, it acquired land and started building two mega-yards in Illinois and Washington, scheduled to open in 2026. These expansions will support growth in recycled parts and enhance productivity.The integration of expertise from its North American and European segments is expected to enhance LKQ’s procurement, remanufacturing, product development and growth in North American hard parts while creating opportunities in electrification. It will also deliver financial advantages, such as vendor financing and reduced capital costs.Investor-friendly moves also boost shareholders’ optimism. The company is committed to maximizing shareholders’ value. It returned $78 million to shareholders through dividends and $40 million through share repurchases in the first quarter of 2025. It also has an active buyback program in place. LKQ has bought back $2.8 billion of stock since initiating its first repurchase plan in October 2018. In October 2024, it boosted its stock repurchase authorization by $1 billion. And as of March 31, 2025, LKQ had $1.7 billion remaining on the stock buyback authorization.Anticipated Decline in Repairable Claims to Ail LKQLKQ faced significant revenue and margin headwinds in 2024 due to a decrease in repairable claims in North America. This trend continued into the first quarter of 2025, with a 10% decline in repairable claims. The company expects headwinds on repairable claims and salvage margins to continue in 2025, particularly in the first half of the year.Ongoing weak demand in the light vehicle and RV product lines continues to challenge the specialty segment. Tariff-related economic uncertainty, along with inflationary pressures, has dampened consumer confidence, reducing discretionary spending in key markets. As a result, the segment's EBITDA margin is expected to be near the lower end of the 7% to 8% range.Stocks to ConsiderSome better-ranked stocks in the auto space are Hesai Group HSAI and Standard Motor Products, Inc. SMP. HSAI sports a Zacks Rank #1 (Strong Buy), while SMP carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for HSAI’s 2025 earnings indicates year-over-year growth of 336.36%, respectively. EPS estimates for 2026 have improved 12 cents in the past 30 days.The Zacks Consensus Estimate for SMP’s 2025 sales and earnings implies year-over-year growth of 17.1% and 12.62%, respectively. EPS estimates for 2025 and 2026 have improved 6 cents and a penny, respectively, in the past seven days.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Standard Motor Products, Inc. (SMP): Free Stock Analysis Report LKQ Corporation (LKQ): Free Stock Analysis Report Hesai Group Sponsored ADR (HSAI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks