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Pep Boys Oversold: Trader Mike Murphy


If you’re looking for a stock that’s oversold, top trader Mike Murphy says look no further than Pep Boys.

Shares tumbled as much as 20%, after private equity firm Gores Group walked away from a $791 million deal to buy the auto parts retailer.

Murphy says the slide was too great. Well, he's not just saying it, he's putting his money where his mouth is. “We bought at $8.56,” he reveals.

Here’s why:

“At current levels, the stock is trading at less than 6 times EBITDA – a major discount to group,” says Murphy.

Also, Murphy sees a slew of potential catalysts including 1) the summer driving season, 2) people keep cars longer and 3) the potential of another suitor.

On top of that, he says there’s something about the company that most people don’t know. “They holding a lot of real estate – currently they’re holding $800 million in real estate.”

All told, “the stock should trade into the double digits and it should get there quickly," he says.

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You can find our conversation with Mike Murphy about 2:30 into this video clip.

Posted by CNBC's Lee Brodie

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Trader disclosure: On May 30, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Brian Kelly is long WFC; Brian Kelly is long INTC; Brian Kelly is long XHB; Brian Kelly is long PWR; Brian Kelly is long MSFT; Brian Kelly is long VZ; Brian Kelly is long T; Brian Kelly is long ADM; Brian Kelly is long XLU; Brian Kelly is long AAPL; Brian Kelly is short EUROSTOXX 50; Brian Kelly is short FTSE 100; Brian Kelly is short CAC40; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long PNC; Joe Terranova is long SBUX; Joe Terranova is long SJM; Joe Terranova is long UPL; Joe Terranova is long WFM; Joe Terranova is long AAPL; Joe Terranova is long NXPI; Joe Terranova is long LPX; Joe Terranova is long SNDK; Joe Terranova is long CNX; Joe Terranova is long LQD; Joe Terranova is short JUNE MINI S&P FUTURES; Stephen Weiss is long UVP; Stephen Weiss is long EUO; Stephen Weiss is long T; Stephen Weiss is long VZ; Stephen Weiss is short X; Stephen Weiss is short JCP; Stephen Weiss is short MT; Stephen Weiss is short CMI; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU

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