Last year was a wild one on the macro front, with changes to trade policies getting a lot of the attention. What's more, artificial intelligence (AI) continued to be a hot topic, as businesses pour huge amounts of money into related projects. As we turn our attention to the new year, though, the smartest investors are looking at ways to upgrade their portfolios for future success.
Here's one unstoppable stock, which might be the furthest thing from AI, that I predict will make investors money in 2026.
Image source: Getty Images.
This top retail stock has a stellar track record of positive returns
What if I told you that in the decade-long period between the start of 2016 to the end of 2025, this company's share price ended the year with positive returns in all but one year? You'd certainly be interested. This is exactly what O'Reilly Automotive (ORLY 1.58%) has done. Its stock rose 15% last year. The only down year in the past decade came in 2017.
O'Reilly's steady stock gains are a direct result of its fundamental strength. The company has posted same-store sales (SSS) growth in 32 straight years, with 2025 likely adding another year to that impressive streak.
This appears to be a safe business to own. Demand remains healthy in strong and weak economies, simply because people need their cars to always work properly. This gives me confidence that O'Reilly will perform well in 2026.
NASDAQ: ORLY
Key Data Points
O'Reilly's valuation is a wild card
Rising SSS and new store openings help expand the top line. When it comes to the bottom line, Wall Street consensus analyst estimates call for O'Reilly's earnings per share (EPS) to increase by 11.4% in 2026 compared to last year. I believe this is a very reasonable forecast. For what it's worth, diluted EPS grew at an annualized pace of 17.9% between 2019 and 2024.
The wild card is valuation, which is hard to predict since it's based largely on market sentiment. Right now, O'Reilly shares trade at a price-to-earnings ratio of 32.5. This has come down notably in the past four months. However, it's 25% more expensive than its trailing-five-year average.
To its credit, O'Reilly is an exceptional business. It's a leader in the aftermarket auto parts industry. It continues to expand with new stores. Profits and free cash flow are used to fund share repurchases. And there is minimal threat of disruption.
While I wouldn't bet on valuation expansion to occur this year, I believe the market will continue to view the company in a very favorable light. This year should be another positive one for the stock.
