How I Made $5000 in the Stock Market

O’Reilly Automotive Stock Is Worth the Premium Price

Sep 25, 2025 02:00:00 -0400 by Paul R. La Monica | #Retail #The Trader

(Luke Sharrett/Bloomberg)

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It may be hard to get the O’Reilly Automotive jingle out of your head once you hear it. But don’t hold the auto parts retailer’s earworm ads against the company—or its stock. O’Reilly continues to be one of the top retailers in the country, and its shares have more room to rev higher.

Yes, O’Reilly’s stock, at $103.47, is up more than 30% this year. But Bryan Lee, chief investment officer at Blue Zone Wealth Advisors, thinks it’s still worth buying. His firm owns both O’Reilly and its rival AutoZone , a 2025 Barron’s stock pick. Lee said O’Reilly and AutoZone, which recently posted a solid increase in sales, will benefit from more do-it-yourself consumers looking to do repairs on aging cars. And he argues that the two stocks can gain market share from competitors.

Advance Auto Parts is expected to report a 6% decline in sales this year and just 1% top-line growth in 2026 while sales at Genuine Parts are only estimated to increase 2.6% and 3.5% this year and next. O’Reilly’s sales are forecast to grow more than 6% annually for the next two years. “This is a growing pie and more of it is up for grabs,” Lee told Barron’s.

O’Reilly CEO Brad Beckham said during the company’s earnings conference call with analysts in July that “the core fundamental drivers of demand in our business remain very solid, underpinned by the increasing age” of vehicles and “the corresponding steady annual increases in miles driven.” In other words, O’Reilly isn’t necessarily dependent on a pickup in demand for new cars and trucks.

O’Reilly isn’t cheap, trading at about 35 times this year’s earnings estimates, while AutoZone’s forward price/earnings multiple is just 27. But TD Cowen analyst Max Rakhlenko calls it “a best-in-class retailer” that should trade “at a premium given its consistently strong performance.”

One key reason? Logistics. Rakhlenko pointed out that the company’s top-notch supply-chain network is the “key differentiator in a very competitive industry.” He noted that because O’Reilly has so many regional distribution centers throughout the country, “some stores receive as many as 6 to 8 replenishments per day” and that employees at one store he visited told him that the average delivery time was under 20 minutes.

O’Reilly has been lumped in with Costco Wholesale and Walmart as a so-called COW stock, an acronym that UBS analyst Michael Lasser created to describe this trio of three top retailers that deserve their lofty valuations. Another positive sign? Consumers don’t seem to be too concerned about tariffs when shopping for oil, spark plugs, and brake pads. Lasser said in a report after the company’s latest earnings release that O’Reilly will benefit from its leadership position in an industry “that will prove remarkably resilient to potential economic weakness due to rising inflationary pressure.”

Both Rakhlenko and Lasser have a Buy on O’Reilly, as do more than 75% of the analysts covering the stock. Rakhlenko’s price target of $125, more than 20% above its current price, is the highest on Wall Street. So feel free to sing that catchy tune from the O’Reilly commercials.

Write to Paul R. La Monica at paul.lamonica@barrons.com