HLLY - Holley: I'm Not Going Along For This Ride

2024-02-04 09:45:14 ET

Summary

• Holley, a provider of aftermarket car and truck parts, has disappointed investors with a 17.5% drop in shares while the S&P 500 has risen 22.4%.
• Revenue and profit weakness in 2023, attributed to supply chain constraints and normalizing demand post-COVID, have contributed to the decline.
• Recent quarterly results show some improvement, but high debt levels and inconsistent financial performance warrant a "hold" rating for the stock.

As an investor, I take pride in my track record. Unfortunately, nobody is right 100% of the time. Every so often, what I thought was going to be a good prospect turns out to be a dud. And the latest example of that I would like to point to involves Holley ( HLLY ), an enterprise that is dedicated to providing customers with aftermarket parts for cars and trucks. Estimates vary as to how many vehicles are on the road in the US alone. The most typical estimate that I see is between 290 million and around 300 million. Naturally, this makes the space that Holley operates in quite large. Add on top of this the fact that the average age of vehicles on the road is growing, which means that aftermarket parts demand will likely continue rising, and you can imagine why I was bullish about the business when I wrote about it in August of 2022....

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