12 Stocks That Could Split in the Near Future

10. O’Reilly Automotive Inc. (NASDAQ:ORLY)

Share Price as of January 19: $1,216.79

Surge in Share Price in 5 Years: 176.12%

Stock Split Confirmed: No

Number of Hedge Fund Holders: 41

O’Reilly Automotive Inc. (NASDAQ:ORLY) is an auto parts retailer that provides automotive aftermarket parts, tools, supplies, equipment, and accessories for both professional and do-it-yourself customers. It provides new and remanufactured parts and maintenance items, like alternators, batteries, and brake system components.

The company’s Q3 2024 growth was driven by its Professional business, which saw a 15% year-over-year increase in ticket counts. This segment caters to professional mechanics and repair shops and delivered mid-single-digit comparable store sales growth in the third quarter. This represented a 7.9% growth. This was primarily due to an increase in the number of service transactions by 12%.

The focus on this segment is significant given the expected recovery in discretionary spending. Barclays analyst Seth Sigman raised his price target on the company to $1,110 from $1,088 on January 8, maintaining an Equal Weight rating. This reflects the firm’s improved outlook for the retail sector in 2025, as it anticipates discretionary spending to bounce back after a period of weakness.

Wedgewood Partners views O’Reilly Automotive Inc. (NASDAQ:ORLY) as a dominant player in the US automotive parts market. It benefits from competitors’ focus on other segments. While growth has normalized, the firm believes in the company’s strong market position. Here’s what is said in its Q4 2024 investor letter:

“O’Reilly Automotive, Inc. (NASDAQ:ORLY) modestly contributed to performance for the quarter and for the year. After a few years of outsized revenue and earnings growth, O’Reilly delivered more normalized sales and earnings growth in 2024 but continues to dominate in the highly fragmented automotive parts industry. As we have noted in the past, the Company has a mostly singular focus on the U.S. market, while several competitors have diverted their attention and investments away from the large and fragmented domestic market toward non-U.S. or nonautomotive markets. O’Reilly has taken profit share, particularly in the faster growing do-it-for-me (DIFM) end markets, by focusing both its hiring and capital expenditures on their U.S. stores and distribution infrastructure, while limiting acquisitions. We would consider adding to our positions in the future if short-term investors ever soured on shares due to protracted bouts of mild weather.”