Wells Fargo’s Best Growth Stocks: 28 Stocks With The Highest Consensus EPS Growth Estimates

22. O’Reilly Automotive, Inc. (NASDAQ:ORLY)

Consensus Long-Term EPS Growth Estimate: 12%

Number of Hedge Fund Holders: 52

O’Reilly Automotive, Inc. (NASDAQ:ORLY) is an American car parts retailer headquartered in Missouri. The firm sells new and refurbished parts through its stores. It’s another stock that has been hit hard by the weak consumer spending environment in the US. Ahead of the November election, O’Reilly Automotive, Inc. (NASDAQ:ORLY)’s shares had gained a modest 23% as consumer demand has remained muted. However, the firm benefits from a diversified income statement that depends on consumers and repair shops. The latter business has helped O’Reilly Automotive, Inc. (NASDAQ:ORLY) avoid a sharper stock price downturn. This is because during H1 2024, while the firm’s consumer revenue grew by 2.5%, the revenue from parts sold to shops grew by 8.5%. Additionally, there might be pent-up potential built up in the stock that can be released due to robust economic activity. This potential was hinted at when O’Reilly Automotive, Inc. (NASDAQ:ORLY)’s shares gained 6% after the election and are up by 4.3% since then.

ClearBridge Investments mentioned O’Reilly Automotive, Inc. (NASDAQ:ORLY) in its Q3 2024 investor letter. Here is what the fund said:

“Skepticism over the consumer has left some high-quality stocks with depressed valuations and allowed us to reduce our consumer discretionary underweight with the addition of O’Reilly Automotive, Inc. (NASDAQ:ORLY) and Starbucks. While we have been cautious on retailers for quite some time, auto parts retailer O’Reilly is a best-in-class, high-quality operator with high returns on invested capital and a solid history of consistent execution and sustainable share gain, and it enjoys rational competitive dynamics in the broader industry. In addition, auto parts retailing carries some counter-cyclicality as consumers tend to hold on to their cars longer, requiring more repair and maintenance, during softer economic environments. We think a high-quality franchise like O’Reilly trading at a reasonable valuation in an otherwise expensive market is worth our attention and we initiated a starter position.”