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Better Than I Ever Expected

Stock (Symbol) Stock Price

O’Reilly Automotive (ORLY)

$174

Data is as of Expected to Report Sector

October 30, 2014

Feb 2 – Feb 9

Food & Necessities

Sharek’s Take
David SharekO’Reilly Automotive continues to perform better than I ever expected. It’s beaten the street every quarter since Fall 2011 and even then it still hit estimates. The latest beat — the company made $2.06, beat the street estimates by 10 cents — pushed ORLY to a new high. This “18% grower” in my eyes keeps pushing out profit growth in the low-20% range, and Wall Street appreciates it (and obviously thinks the growth is quality, cuz the stock’s at a high). Management is doing it through a combination of (1) opening more stores (200 a year, currently 4000), (2) buying back stock (2% last qtr), (3) acquiring other auto parts stores/chains, and (4) getting more out of these stores in addition to its own. Same store sales rose a solid 6% last quarter, est. were for 4%). Although ORLY is hot — and I’m glad I didn’t sell it — looking to 2015 the stock only has 5% upside to Fair Value. It’s P/E of 21 is so close to my 2015 est of 22. ORLY continues to perform better than I ever expected.
One-Year Chart
ORLY_2014_Q4Look at how the stock has had two successful breakouts in the last year. The stock breaks out to a new high and never touches back to where it used to be. It did this twice in the chart from 2013 Q4. So that’s four in two years. Impressive but how many of these can you do before breaking down?
Earnings Table
ORLY_2014_Q4_EPSLast qtr, sales increased 9% and profits increased 22%. That’s getting the most out of your money.

The company beat the street by 10 cents, the best beat in more than two years.

Annual Profit Estimates
keep ticking higher, that’s helping the stock more than you think.

Quarterly profit estimates show high-teens growth coming that I expect ORLY to beat.

Fair Value
ORLY_2014_Q4_PHThe stock is currently selling for 24x 2014 estimates. I that P/E is a little high. 22x earnings is what I feel ORLY is worth. When I multiply 22x 2015’s estimate of $8.28 I get upside to 2015’s Fair Value of only 5%. 2016’s upside is decent, but keep in mind that’s over a year for maybe 18%. This stock is a candidate for sale if I see something better.
Ten-Year Chart
ORLY_2014_Q4_10yrWhat an amazing ten-year chart. Used to own ORLY way back, and sold it, but I can’t find the transaction details. Anyway, I obviously should have held. ORLY has done better than I’ve ever expected.
Power Ranking Bottom Line
Growth Portfolio

24 of 25

O’Reilly Automotive is clicking on all cylinders. The stock is timely but upside is limited — which is what I always say. ONLY is good for a long-term buy-and-hold stock but I don’t see you making big short-term money here. I might sell ORLY if I need the money.

ORLY is ranked 22nd of 25 stocks in the Growth Portfolio Power Rankings.
The stock isn’t a fit for the Aggressive Growth Portfolio.
Aggressive Growth Portfolio

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