O'Reilly Automotive (ORLY -1.08%) isn't an exciting business by any stretch of the imagination. In fact, this might be one of the most boring companies on the planet. It sells aftermarket auto parts to DIY and professional customers through physical stores. That's not a page-turning operational description.
However, this retail stock's performance will get you up off your seat and cheering in no time. Over the past 30 years, shares have soared 42,650% (as of Aug. 15). An investment of $2,350 back then would be worth $1 million today.
But if you were to buy $10,000 worth of O'Reilly stock in 2025, will you become a millionaire in 10 years?
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O'Reilly's bullish case
O'Reilly's fantastic return comes from the fact that this is a great company. And I believe there are some key reasons why it's so great, all of which support the stock's bull case.
For starters, O'Reilly benefits from durable industry tailwinds. The average age of cars on the road in the U.S. is now 12.5 years. It has steadily increased over the past two and a half decades. As these vehicles age and get past their original warranty, consumers must spend money on aftermarket parts to keep them in working condition. What's more, the number of cars on the road continues to increase.
These long-lasting trends support O'Reilly's long-term growth prospects. Revenue rose at a compound annual rate of 8.3% in the past decade. And the business continues to open new stores, with 200 to 210 planned just in 2025.
Another reason this is a high-quality business is the consistent demand that O'Reilly sees throughout an economic cycle. In strong economic times, when consumer confidence and spending are robust, people tend to drive more. This increases the wear and tear on their vehicles. As a result, there is a clear need for the parts and supplies O'Reilly stores sell.
When a recession hits, unemployment rises, and consumers pull back on their spending, they certainly delay buying new vehicles. However, they still need their existing cars to work. This setup incentivizes spending on maintenance and upgrades. Again, O'Reilly benefits.
Being able to perform well from a fundamental perspective in good and bad times makes O'Reilly an attractive investment. Nothing stands out quite like the fact that 2025 is shaping up to be the company's 33rd straight year of same-store sales growth. That's an unbelievable track record.
Investors will also appreciate the management team's capital allocation policy. Because of O'Reilly's consistent profitability, it's left with excess cash. Executives have plowed this money into stock buybacks, which have helped reduce the diluted outstanding share count by 3.1% in the past year alone.
Waiting for a 100-fold jump
For this stock to turn a $10,000 investment into $1 million, its price would need to register a 100-fold rise. This might have been how O'Reilly shares performed in the past. However, it's not a realistic outcome as we look toward the future. And it definitely won't happen in the next decade. In fact, investors shouldn't bet the house on any single company helping them reach a $1 million portfolio balance.
This outstanding business could continue to post double-digit earnings-per-share growth on a yearly basis. But it's at a much more mature stage of its lifecycle these days. Expecting the stock price to rise 100-fold is irrational.
That doesn't mean O'Reilly doesn't deserve a place on your watch list. While the stock looks historically expensive at its current price-to-earnings ratio of 36.4, investors can wait for a pullback before scooping up shares.
