Janice R. Andrews
In the fast-paced world of stock market investing, where headlines are dominated by tech giants, it is easy to ignore the gradual expansion and durability of a seemingly ordinary company strategy. Nestled within the Nasdaq Composite, O’Reilly Automotive (NASDAQ: ORLY) is a retail company that has quietly outperformed even the most euphoric tech titans, rising an incredible 619% over the previous ten years. Investors are left wondering: Is this the right moment to get into this fantastic stock? after such spectacular performance.
O’Reilly Automotive demonstrates that sometimes ordinary is preferable, despite the appeal of cutting-edge tech firms being intriguing. O’Reilly, which specializes in aftermarket car components, has 6,095 locations nationwide and serves both professional technicians and do-it-yourself hobbyists. The business’s strong fundamentals speak loudly about its success despite its low visibility.
O’Reilly saw impressive growth between 2018 and 2023, with compound annual growth rates for revenue and diluted profits per share of 10.6% and 19%, respectively. O’Reilly demonstrated resilience in 2020, with a 26% increase in net profits and a 14% increase in sales despite the COVID-19 pandemic. The business’s strong financial position was further demonstrated by the remarkable $2 billion in free cash flow it produced last year.
O’Reilly’s strong competitive position and recession-resistant character are important factors contributing to its success. The company’s size offers it a considerable advantage in inventory management and customer service even though it operates in a fragmented market. In addition, O’Reilly has grown same-store sales for 31 years running, demonstrating its resilience to market fluctuations. The need for car components never goes away, thus O’Reilly can count on a consistent flow of income regardless of economic ups and downs.
Investors are faced with the challenge of a premium value despite the company’s outstanding performance. O’Reilly is trading at a higher multiple than both the market as a whole and its historical average, with a price-to-earnings (P/E) ratio of 28.4. Although the company’s remarkable history warrants a premium, cautious investors can want to use a dollar-cost averaging approach in order to reduce the risks related to the present value.
When deciding whether to invest in O’Reilly Automotive, it’s critical to thoroughly analyze all relevant variables. The stock is an appealing option for long-term investors despite not making The Motley Fool Stock Advisor’s top 10 list due to its resilient and steady performance. Furthermore, the historical performance of the Stock Advisor service in comparison to the S&P 500 highlights the possibility of significant gains in the long run.
O’Reilly Automotive is proof of the lasting worth of conventional business methods in a constantly changing marketplace. O’Reilly offers investors looking for stability and steady returns in their portfolios a fantastic chance because of its exceptional growth track, recession-proof character, and solid fundamentals. Given the stock’s extraordinary performance and its ability to defy tech trends, now may be a great opportunity to add O’Reilly Automotive to one’s investing portfolio.
