An update on Advance Auto Parts; Beware of Webull and Freedom Holding; The science-backed formula for becoming a 'super ager'

1) Regular readers will recall that I've had my eye on auto-parts retailer Advance Auto Parts (AAP). And last Thursday, the stock skyrocketed an incredible 57% after the company reported first-quarter earnings...

Revenue came in at $2.6 billion, down from $2.8 billion in first-quarter 2024... But it still exceeded estimates of $2.5 billion. And the adjusted loss per share was only $0.22 versus much worse expectations of negative $0.82.

The stock's big move all comes down to expectations...

Advance has been disappointing investors for years. The stock had plunged to lows not seen since the global financial crisis 16 years ago, as you can see in this 20-year chart:

So it exploded upward as investors breathed a sigh of relief when the company reaffirmed its full-year guidance, despite the threat of tariffs. It's guiding for revenue between $8.4 billion and $8.6 billion and adjusted earnings per share of $1.50 to $2.50.

I last wrote about Advance in my September 6, September 11, September 13, and September 16 e-mails. In the latter where I did a deep dive, I predicted the kind of huge move we saw last week:

Advance isn't being battered by online competition... and its revenues are stable, its cash flows are positive, and its balance sheet is decent.

In light of how much the stock has fallen and the overwhelming negative sentiment toward it, if the company reports even a mediocre (rather than catastrophic) quarter, the stock could quickly pop 50%.

However, I also cautioned that it could be a value trap. As I continued in that e-mail:

I wouldn't be willing to call Advance a "buy" right now because there's too great a chance that it's a value trap. [CEO Shane O'Kelly] has been in charge for a year and things are getting worse, not better...

If O'Kelly can turn Advance around, even to a modest degree, the stock looks like an easy double. And if the company really turns around, the stock could be a 10-bagger, just as Best Buy (BBY) was from 2013 through 2021.

Personally, I would be OK waiting and watching for concrete signs of a turnaround... even though that likely means I would miss the first 50% rebound in the stock.

Advance closed at $41.14 the day I wrote those words. It ticked higher for a few months before sliding lower since February. And now, after the huge move in the wake of earnings, it last closed at $48.67 per share.

Below you can see the stock's trajectory since September 16:

In other words, I've gotten my wish: Advance is showing signs of a turnaround, even though I missed the first 50% move from the bottom.

As such, my team and I here at Stansberry Research will dig deeper to see whether the stock is worth adding to our Stansberry's Investment Advisory model portfolio. If it is, then as always, subscribers will be the first to know.

If you aren't an Investment Advisory subscriber already, you can find out how to become one – and take advantage of a 30-day, full money-back guarantee if you aren't satisfied – right here.

2) In last Thursday's e-mail, I said online trading platform Webull (BULL) was "a stock to run far away from." Sure enough, the stock dropped 9% on Friday after it released first-quarter earnings.

The company reported 32% revenue growth and $13.1 million in profit. But even if you believe its numbers (count me skeptical – it smells like yet another China-based fraud to me), that wouldn't justify the company's $5.9 billion market cap.

3) Speaking of stocks to avoid, I warned my readers about Kazakh financial-services company Freedom Holding (FRHC) throughout the years:

• Freedom Holding: After 'Borat,' the Silliest Kazakh Import of the Century (January 5, 2021)
• Problems at Freedom Holding (March 23, 2022)
• Hindenburg Research report on Freedom Holding (August 16, 2023)

Since I first wrote about it, the stock has risen strongly and currently sits near an all-time high, as you can see in this five-year chart:

So am I wrong or just early in calling it a doomed stock? I think the latter...

My friend Carson Block of Muddy Waters, one of the most respected activist short sellers, published a post on Freedom Holding last Thursday. He highlights that the stock's latest surge is likely driven by the company renting an office in New York City and listing it as its principal executive office in its U.S. Securities and Exchange Commission filings (despite having no revenue in the U.S.), which triggered the stock being added to the Russell 1000 Index: A Shady Kazakh Company Actively Gaming Passive U.S. Markets. Excerpt:

If you headed a financial services company based in that Market of Dreams known as Kazakhstan and Hindenburg Research published evidence your company "i) brazenly skirts sanctions (ii) shows hallmark signs of fake revenue (iii) commingles customer funds then gambles assets in highly levered, illiquid, risky market bets (iv) and displays signs of market manipulation in both its investments and its publicly traded shares", how hard would it be for you to generate $140 million in forced stock buying by gaming inclusion into the Russell 1000 index? If your company is Freedom Holding Corp. ($FRHC), it turns out it's not that hard.

FRHC, which found no merit to Hindenburg's allegations in its internal investigation, seemingly only needed to rent an office in the U.S...

The high rate of passive investing warps the U.S. equity markets in various ways. In this case, a simple lease agreement seems to be all that's needed to significantly enrich some highly questionable characters who operate a financial business focused on Kazakhstan. Either this is a blatant abuse of the U.S. capital markets or Kazakhstan has come a very long way since the first Borat movie was released.

Given all the red flags surrounding this company and its high valuation (a $10.3 billion market cap, with the stock trading at 6.5 times trailing earnings and 31.6 times trailing earnings per share), I continue to recommend staying far away from this stock as well...

4) In last Monday's e-mail, I shared this Wall Street Journal article, Americans in Their 80s and 90s Are Redefining Old Age, and an excerpt about the importance of exercise from my book, The Art of Playing Defense.

Today, I'd like to share another WSJ article along the same lines: A Doctor's Science-Backed Formula for Aging Better. Excerpt:

It turned out there wasn't much in the genes of these "super agers" that set them apart. But as a group, they were different from many Americans of similar ages. They were thinner. They exercised more. They were better-educated. Even at advanced ages, they continued to volunteer, dance, see friends and pursue activities that gave them purpose and enjoyment.

The article's key areas of focus are exercise, sleep, diet, protein, testing, antiaging supplements and drugs, and improving mental health.

If you've been lax in taking care of yourself, there's no better time to start than the present. And like I said in my e-mail last week, "Figure out what works for you – but make it a habit!"

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.