Q. Does the recession hurt or help my shares of AutoZone Inc.? — B.R., via the Internet

A. On the one hand, the retailer of auto parts and accessories benefits from cash-strapped motorists fixing up their cars rather than purchasing new vehicles. The age and mileage of cars on the road continues to rise.

On the other hand, if the economy gets bad enough, they also will defer spending on their existing vehicles. That's why the firm has begun a consumer education campaign to encourage proper vehicle maintenance.

Shares of AutoZone (AZO) are down 17 percent this year, following gains of four percent last year and 26 percent in 2006.

AutoZone posted a 12 percent increase in net profit in its fiscal fourth quarter, ended August 30, which had one more week than the year-earlier period. It is in a strong financial position, with healthy cash flow to service the modest debt on its balance sheet.

One believer: Hedge-fund manager Edward Lampert of ESL Investments, who controls 38 percent of AutoZone, has continued to buy its shares this year. Lampert was previously a director of the firm as well.

AutoZone has more than 4,000 stores in the US and more than 100 stores in Mexico, with the latter offering plenty of room for growth. New-store growth has provided much of the company's increasing revenue in the past five years.

Besides its do-it-yourself customers, about half of those stores also operate a commercial programme of parts delivery to auto-repair garages, dealers and service stations. It also sells automotive diagnostic and repair software.

The consensus rating on AutoZone stock from Wall Street analysts is a "hold," according to Thomson Financial, consisting of five "strong buys," two "buys" and 15 "holds".

Stocks of auto suppliers tend to outperform in down economies.

AutoZone has had better profit margins than competitors Advance Auto Parts and O'Reilly Auto Parts. But O'Reilly's all-cash acquisition of CSK Auto will mean stiffer competition for AutoZone's West Coast operations. O'Reilly had been focused on the Southeast and Midwest.

William Rhodes III, a 10-year AutoZone veteran, has been chief executive since 2005 and chairman as well since 2007.

AutoZone earnings are expected to increase seven percent in the fiscal year ending in August and 12 percent the next year. The five-year annualised growth-rate projection of 12 percent is in line with its auto-parts-stores peers.

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Q. How good is FMI Large Cap Fund? — R.J., via the Internet

A. Limiting its portfolio to about two dozen stock names, this fund has been one of the better performers in the large-cap category since its launch in late 2001.

It features low turnover and low volatility. It also has been able to attract money, growing from $300 million in assets at the end of 2006 to $1.3 billion.

FMI Large Cap Fund (FMIHX) is down 28 percent over the past 12 months, with a three-year annualised decline of four percent. Both results rank in the top three percent of large-cap growth and value funds.

"We recommend FMI Large Cap, and its conservative stock-picking approach suggests it could be a core holding," said Bridget Hughes, analyst with Morningstar Inc. in Chicago. "However, risks are also higher with any concentrated portfolio fund, and that means it is better in a supplemental role."

With only a small number of holdings, any investment mistake is felt quickly, she noted.

The fund's five-person investment policy committee is headed by experienced managers Ted Kellner and Patrick English, who also lead the team that runs FMI Common Stock Fund. After thorough research, they invest in large-cap companies with durable business models, recurring revenue, strong returns on invested capital and solid management. Valuation is measured using price-to-earnings and price-to-cash metrics.

"This fund has flown under the radar because it comes from a small boutique in Milwaukee (Fiduciary Management Inc.) that offers only a few funds," Hughes said. "It would close this fund if it got too big, but that's a long way off, and it is really manageable now."

Business services stocks represent nearly one-fourth of the portfolio, with consumer services and consumer goods other major concentrations. Top stocks were recently Wal-Mart Stores Inc., Kimberly-Clark Corp., Cintas Corp., Accenture Ltd., General Electric Co., Diageo PLC, Cardinal Health Inc., Bank of New York Mellon Corp., Robert Half International Inc. and W.W. Grainger Inc.

This "no-load" (no sales charge) fund requires a $1,000 minimum initial investment and has a one-percent annual expense ratio.

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Q. So much talk about the US dollar getting stronger. What actually makes the dollar stronger or weaker? Is it what the government does? —D.L.

A. Interest rates play a major role in the dollar's value, and lately it also has become a safe haven for the world in volatile financial times.

The dollar was strong in 2005 and 2006 because US interest rates were considerably higher than European rates. That shifted in the last couple of years when US rates came down and European rates went up, pushing the dollar to new lows.

Most recently, even though U. rates have come down, European rates have come down even further. That boosted the dollar.

"We're also seeing a flight to quality because people are scared stiff," said David Wyss, chief economist with Standard & Poor's Corp. "They go to the dollar because it is the safest place to be."

Besides adjusting interest rates, the government can influence the dollar through direct intervention, buying and selling dollars in the open market, Wyss said.

"I think the dollar is going to start weakening again because the panic is going to subside and the flight to safety" will reverse, Wyss said.

Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 N. Central Ave., Suite 302, Phoenix, AZ 85004-1248, or by e-mail at andrewinv@aol.com.