O'Reilly currently trades at $1,425 and has been a dream stock for shareholders. It’s returned 370% since April 2020, tripling the S&P 500’s 122% gain. The company has also beaten the index over the past six months as its stock price is up 23.4%.

Is it too late to buy ORLY? Find out in our full research report, it’s free.

Why Is O'Reilly a Good Business?

Serving both the DIY customer and professional mechanic, O’Reilly Automotive (NASDAQ: ORLY) is an auto parts and accessories retailer that sells everything from fuel pumps to car air fresheners to mufflers.

1. Surging Same-Store Sales Show Increasing Demand

Same-store sales show the change in sales for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year. This is a key performance indicator because it measures organic growth.

O'Reilly has been one of the most successful retailers over the last two years thanks to skyrocketing demand within its existing locations. On average, the company has posted exceptional year-on-year same-store sales growth of 5.4%.

2. Elite Gross Margin Powers Best-In-Class Business Model

We prefer higher gross margins because they not only make it easier to generate more operating profits but also indicate product differentiation, negotiating leverage, and pricing power.

O'Reilly has best-in-class unit economics for a retailer, enabling it to invest in areas such as marketing and talent. As you can see below, it averaged an elite 51.2% gross margin over the last two years. That means O'Reilly only paid its suppliers $48.77 for every $100 in revenue.

3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

O'Reilly has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition. The company’s free cash flow margin was among the best in the consumer retail sector, averaging 12.2% over the last two years.

Final Judgment

These are just a few reasons O'Reilly is a high-quality business worth owning, and with its shares topping the market in recent months, the stock trades at 31.7× forward price-to-earnings (or $1,425 per share). Is now a good time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More Than O'Reilly

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.